Drilon says sin taxes won’t lead to job, profit losses

Senator Franklin Drilon

MANILA, Philippines – Debates on the sin tax bill resumed Tuesday with Senator Ralph Recto questioning t Senator Franklin Drilon on the implications of increased taxes on tobacco and liquor products.

Recto, the former chairman of the Senate Ways and Means Committee and the initial sponsor of the sin tax bill, raised the issue that many people in the tobacco and liquor industry could lose jobs from the increase in taxes.

“If we increase the taxes too much, thousands of workers, distributors, farmers, etc., could be displaced,” Recto said.

“This is the reason why people are rallying outside, it’s because they are afraid they will lose their jobs,” he said.

Drilon, the acting chairman of the Ways and Means Committee, maintained his position that there will not be any job losses and companies will not suffer from the additional taxes.

“Companies will be the collecting agencies, it is a pass-on tax,” Drilon said. “[They] will not lose profits.”

He also pointed out that the intention of the sin tax bill was to curb the consumption of alcohol and tobacco products among the poor, who he previously stated are the biggest consumers.

Recto however reiterated that because of the increased taxes, which will increase the price of the products, there will be less sales and revenues on the part of the companies.

“It cannot be denied that the volume [consumed] will drop when prices increase,” Recto said.

He went on further to flesh-out the details of the different tax rates on distilled liquor, fermented liquor, wines, with Senator Drilon.

Recto’s version of the sin tax bill sought additional revenues of P15 billion from additional taxes on tobacco and alcohol products, to which  the Department of Health, Department of Finance, and the Bureau of Internal Revenue protested because they had set a target of P60 billion.

Senator Drilon’s version of the bill was seeking P40 to P45 billion in additional revenues. He had previously expressed that he wants the period of amendments to be finished and voted on by Wednesday so that the Senate may begin deliberations on the 2013 budget.