Sin tax bill certified as urgent by Aquino

Clearing the way for the speedy “one-day approval” of the contentious measure, President Benigno Aquino III has certified as urgent the sin tax bill now being debated in the Senate.

The President cited “public necessity” in prioritizing the measure aimed at curbing harmful cigarette and alcohol consumption while also increasing tax revenues from these so-called sin products.

Under the Constitution, the President can certify bills as urgent in two instances—in case of public necessity and during a public calamity.

Deputy presidential spokesperson Abigail Valte said the certification, which the President made late Thursday, will expedite the Senate discussions and debate on the measure making it possible for the bill to be approved in one day.

“Normally, the second reading and third reading of a proposed law is tackled on separate days. The certification of the President will allow the Senate to have the second and the third reading on the same day,” she said.

The House of Representatives has already approved its own version of the sin tax measure.

Malacañang drew an endorsement of sorts for the sin tax measure from visiting International Monetary Fund (IMF) managing director Christine Lagarde, who told a Palace briefing yesterday that she hoped the bill would be voted on next Monday and that “tax collections will result from this piece of legislation.”

Faster than RH process

Sen. Franklin Drilon, the chair of the ways and means committee, said that with the President having certified the sin tax bill as urgent, he expects the chamber to approve the measure on second and third reading on Monday.

Malacañang’s move will make it possible for the Senate to do away with the three-day required interval between the second and third readings of the measure, he said.

The senators could immediately approve the bill on third and final reading on Monday right after its passage on second reading, he said.

This means the Senate will approve the contentious bill with little more than two weeks of debate.

By contrast, observers noted, the similarly controversial reproductive health (RH) bill, which provides for government endorsement and funding for artificial contraception, has languished in the Senate for the past 15 months as senators have yet to declare an end to the debate on the measure.

The Senate earlier agreed to hold afternoon-to-evening sessions so that the sin tax bill, whose additional target revenues have supposedly been incorporated into the 2013 budget, can be approved as soon as possible.

After the sin tax bill, the Senate is expected to focus its attention on the proposed P2-trillion 2013 national budget.

The government has allocated P54 billion in the proposed 2013 budget for the Department of Health to cover, among other things, the building and or repair of hospitals and rural medical facilities, and PhilHealth insurance premium payments.

Drilon said Mr. Aquino “believes the passage of this very important piece of legislation will buttress the government health agenda and address the high prevalence of smoking in the country.”

Substitute bill

Drilon took over the ways and means committee last month after the former committee chair, Sen. Ralph Recto, came up with a proposal that would have increased the take from sin taxes to only between P15 billion and P19 billion, against the P60 billion that Malacañang wanted.

Recto was severely criticized by administration officials after he reported out the bill.

Drilon has come up with a substitute bill that he considers to be a “good compromise,” with revenues from the increased sin taxes projected at P40 billion and P45 billion.

“We are in the final stretch … but, certainly, without the support of the President, we would not have gone this far,” he said.

“I am confident that our colleagues have seen and realized the importance of this reform measure to a great majority both as a health measure and as a finance bill. I am confident that they will vote for its passage when sessions resume on Monday,” said Drilon whose version drew support from 12 medical health groups last Thursday.

Crux of debate

The debate on the sin tax bill has centered on finding a middle ground on the following concerns: raising enough funds for the government’s universal healthcare program, discouraging smoking and at the same time providing safety nets for tobacco farmers.

The government intends to use the additional sin tax proceeds to finance the operations and repair of government hospitals and provide PhilHealth membership and benefits to 5.2 million low-income Filipinos.

Senate President Juan Ponce Enrile and Sen. Ferdinand Marcos, both from tobacco-farm-rich Northern Luzon, and Recto said they appreciate the government’s intentions but are also concerned about the economic future of tobacco farmers.

The three believe that these farmers will bear the brunt of the resulting higher prices of tobacco products. Additional sin taxes, moreover, could also cause the massive displacement of workers in tobacco-processing plants, they said.

Enrile also warned that the provisions of the World Trade Organization (WTO) could bar the Philippines, as a signatory to the General Agreement on Tariffs and Trade of 1994, from raising taxes on imported cigarettes.

The bill’s author, Sen. Miriam Santiago, however, insists that the Senate should go even higher than the P40 billion to P45 billion compromise proposed by Drilon, insisting on the P60 billion additional revenues in her original version of the bill.

Sen. Gregorio Honasan was the latest to air his concern for tobacco farmers in a radio interview yesterday.

“I have nothing against the benefits of the sin tax bill but I am concerned about the thousands of tobacco farmers who will be uprooted and displaced by the taxation system. In three years’ time, the low-priced cigarettes will be taxed more than a thousand percent,” he said.

The new taxes will favor imported brands “while subjecting our local brands to a slow death,” he said.

Windfall tax vs telecoms

At the Palace briefing, Lagarde yesterday said she also agreed to taxing the windfall profits of the telecommunication sectors, although cautioning the government to move “one step at a time.”

Lagarde was specifically asked if the Aquino administration should also extend the tax hike to telecoms, particularly the excise tax on text messages (short messaging system), a position suggested by the IMF in a paper last March.

She said she was told during a courtesy call on Vice President Jejomar Binay earlier yesterday that “telephone” or “text coverage” in the country was way in excess of 100 percent.

“(This) was in the range of 112 percent, which clearly satisfies one of the two criteria for what we call a good taxation,”—a very broad tax base and a very small rate.

“This is a general principle, of course. Now, what matters of course is the possibility to raise revenue in as transparent a way as possible, with as much distributive effect as possible as well,” she said.

Binay had to pinch-hit for Mr. Aquino who was not feeling well when he woke up Friday.

Lagarde had been scheduled to pay a courtesy call on the President at Malacañang but had to go instead to Binay’s office at Coconut Palace.

Mr. Aquino instead worked from his official residence at Bahay Pangarap across the Pasig River.