House suspends hearings on excise tax bill

The House of Representatives leadership has decided to suspend hearings on all bills seeking to amend the country’s excise tax laws following a World Trade Organization (WTO) ruling that declared local taxes on distilled spirits discriminatory against foreign brands.

Speaker Feliciano Belmonte Jr. said this on Thursday night, citing the appeal of the Distilled Spirits Association of the Philippines (DSAP) to put committee hearings on hold while the Philippine government is pursuing its bid for a reversal of the WTO ruling.

“I assured them that we will not make a decision now. We will hold off (committee) hearings,” Belmonte told reporters.

Reached for comment, Rep. Hermilando Mandanas, chair of the House ways and means panel is conducting the hearings on the issue, said he was not yet aware of such decision from the Speaker.

“There is no indication from the Speaker to hold or freeze hearings on excise tax except to study the request from the distillers,” Mandanas said in a text message.

On Tuesday, DSAP officers met with Belmonte to reiterate their appeal for the suspension of congressional hearings on measures seeking to amend or increase taxes on distilled spirits.

Belmonte said he would send representatives to the WTO proceedings to support the country’s position debunking claims by Spain and the United States that local taxes imposed on liquor and other distilled spirits in the Philippines are discriminatory against imported brands.

The DSAP sent separate letters to Belmonte and Mandanas to appeal for the suspension of legislative proceedings on proposed excise tax amendments.

The letters were signed by business tycoons Ramon Ang of San Miguel Corp., Lucio Tan of Tanduay Distillers Inc., Andrew Tan of Emperador Distillers Inc. and Olivia Limpe-Aw of Destileria Limtuaco. The four represent the country’s biggest distillers and alcohol producers.

The House committee on ways and means has been deliberating on several bills proposing to amend the country’s excise tax system.

According to the DSAP, Congress’ cooperation in the country’s position before the WTO was vital as the economic interest of the country was at stake.

All pending measures on the issue are seeking to amend Section 141(a) and/or (b) of the National Internal Revenue Code relating to excise taxes on distilled spirits “until such time that the WTO Appellate body shall have ruled with finality” on the Philippines’ appeal.

The DSAP said the huge economic impact of the WTO ruling that threatens the very survival of the distilled spirits manufacturing sector including allied and downstream industries. They said DSAP members produced some 66 million cases of distilled spirits in 2010 with gross sales of close to P50-billion (almost US$1-billion).

Also, over a million families depend on our industry which includes alcohol distillery workers, bottling factory workers, sales people, merchandisers, delivery personnel and upstream industries like the sugar industry which alone employs directly half a million people and indirectly about 5 million workers, it added.