Drilon warns against ‘hard bargaining’ on alcohol tax rates in bicam

Senator Franklin Drilon INQUIRER FILE PHOTO

MANILA, Philippines — Senator Franklin Drilon said Thursday he expected “hard bargaining” on the alcohol tax rates of the sin tax bill in the Bicameral Conference Committee of Congress.

In a media forum Thursday, Drilon said that the target revenues on alcohol products in the House version of the sin tax bill differed from the Senate’s version by as much as P11 Billion.

The Senate version aims to collect P23.5 billion on cigarettes and about P16 billion on liquor products. The House of Representatives version aims P26.87 billion from tobacco products and P5 billion from liquor products, Drilon said.

“I foresee substantial agreement on the cigarette tax … because the difference is not substantial,” Drilon said.

“On the alcohol [tax], I expect difficulty,” Drilon said citing the difference in the target revenues. “This is where we expect the hard bargaining.”

Drilon said that he welcomed the statement of Davao City Representative Isidro Ungab, Chairman of the House Ways and Means Committee, saying that the Senate version was “workable.”

“I welcome that statement, we will have a good starting point [for negotiations],” Drilon said. He said he would be very pleased that they are willing to accept the Senate’s version.

Bureau of Internal Revenue Commissioner Kim Henares had said that the passage of the sin tax reform bill will help the country improve its credit rating with the international ratings agencies.

Drilon said that the bill “would be the final hurdle for the Philippines to be in the investment grade.”

An investment grade rating will allow the country to get a lower interest in debt servicing and therefore free up more budget for social services, Drilon said.

“The passage of the sin tax law would impact positively in our credit rating which in turn would allow us savings in our interest payments,” he said.

“The moment we get to investment grade not only will we become a more attractive investment destination but our debt servicing and interest [rate] will go down,” he added.

In the P20 trillion 2013 budget, the country will pay P333.9 billion in debt servicing, Drilon said.

The bicameral conference committee could be held by the end of November, hopefully at the same time as the 2013 national budget, Drilon said.

With regards to the budget, he said that since there were no substantial differences between the versions of the Senate and House, it will be less difficult compared to the sin tax bill.

“The reality is, in the budget there is practically no difference between the House and Senate [versions]. Except for a few items which are not substantial, it will be principally the work of the technical staff [on] how we can reconcile [the versions],” Drilon said.

“I don’t expect much difficulty in the budget,” he said.

By December 20, the budget could be signed already by President Benigno Aquino III, Drilon said.