PALACE FUMBLES ON BACKING REVENUE GOAL FROM 'SIN' TAX
[PHOTO - FINANCE Secretary Cesar Purisima may have for all intents and purposes abandoned the House version of the sin tax bill saying he would rather have the DOF’s original version of unitary tax for cigarettes and alcoholic beverages. “If the Senate will give it to me, obviously being Secretary of Finance, I like higher numbers and so therefore, the original bill is the preferred bill,” Purisima said during the DOF budget hearing. The DOF version imposes tax hikes of over 1,000 percent for both cigarettes and alcohol which aims to raise P60 billion in additional revenues. It said P30 billion would come from tax revenues on cigarettes, P19 billion from fermented liquor, and P11 billion from distilled spirits. The House version, approved last June, however imposed only P4.48 billion tax for alcoholic beverages and P26.8 billion tax for tobacco products. This huge disparity was met with uproar from farmers and workers in the tobacco industry.
MANILA, SEPTEMBER 6, 2012 (TRIBUNE) Written by Angie M. Rosales - After three public hearings, Malacañang still could not justify how they arrived at the projected P60 billion additional revenues supposedly from the implementation of higher taxes on tobacco and liquor or the so-called “sin” products.
[PHOTO -A vendor sells cigarettes at a supermarket in Quezon City in this file photo. A proposed bill restructuring the excise tax on tobacco and alcohol products is seen to generate some P60 billion, according to President Benigno Aquino III, who is pushing for the passing of the sin tax reform bill. AFP/JAY DIRECTO]
Senators also chided government officials for continuously defending the proposed measure in hope of bringing down the growing number of Filipino smokers and earmarking of higher appropriation for health services, saying that these two thrusts appear to be in conflict of the objective of the bill — which is to collect bigger revenues from smokers and beer drinkers.
“I have yet to be given any justification on how it can be feasible,” Sen. Ralph Recto, chairman of the Senate ways and means committee, on the projected P60 billion collections stemming from higher excise or sin taxes under the pending bills currently under deliberation in the upper chamber.
Recto said that even former Budget Chief Benjamin Diokno noted that such figures, estimated to be around half a trillion peso by the end of the planned fifth year implementation of the proposed bill, is not likely to be realized by the revenue collecting agencies.
The panel chairman, before terminating the proceedings, directed the Bureau of Internal Revenue (BIR) to itemized the P75-billion government income from “sin” products under the present system, listing how much taxes were collected from each brand of cigarette and alcohol products.
“We need that to expedite this and come up with a committee report the soonest time possible, so that we can craft a responsible measure. Once they hand over to me the information sought from them, then we will be able to determine how they could actually realize the incremental revenue. We all know anyway who will shoulder this (tax increase),” he said.
Internal Revenue Commissioner Kim Henares, was initially hesitant in complying to Recto on the matter claiming confidentiality of tax records.
But she later on relented to the panel chair provided that she will be allowed to submit a “coded” report shielding the identify of the tax-paying company.
Recto told reporters after the hearing that senators need the data to facilitate completion of a committee report on the sin tax bill that he expects to submit for plenary consideration and approval before Congress goes on another recess next month.
Recto said BIR cannot invoke secrecy of tax data because the committee needs the information in which the Senate will use in coming up with a version of the measure.
“More or less, we can already come up with two-thirds or three-fourths of the bill. We can come up with a draft. We just need the data from them (BIR),” he said.
Crucial on the issue, Recto said, is who will actually shoulder the tax on the incremental revenue.
“There’s a way of doing this. There’s a way to move this forward and I believe that easily we can craft something that will generate additional revenues and at the same time reduce vices from cigarettes and liquors,” he said.
At the same time, Recto admitted he has yet to see proof that the P60-billion revenue target in the original sin tax bill proposed by the Department of Finance is “realistic.”
Recto said to him the target remains a pie in the sky.
FROM THE INQUIRER
BIR asked: Who’ll pay extra sin taxes? By Norman Bordadora Philippine Daily Inquirer 2:55 am | Friday, August 31st, 2012
[PHOTO -Senator Ralph Recto. INQUIRER file photo]
The Senate ways and means committee has asked the Bureau of Internal Revenue (BIR) to identify the specific companies that will pay the P60 billion in additional revenues that it expects to realize from the proposed increase in taxes on tobacco and alcohol.
Senator Ralph Recto, the committee chairman, said he was apprehensive that the more than P70 billion in taxes that are now being collected from the so-called “sin” products would be adversely affected if the proposed increases prove to be too high.
By Recto’s reckoning, since it is already known which companies, products or brands are paying the P70 billion plus, it begs the question where the P60 billion more in revenues that the BIR expects to make from the sin tax hikes would be coming from.
“Who will pay for that?” Recto asked BIR commissioner Kim Jacinto-Henares at a hearing being being conducted by his committee yesterday on the bill proposing to restructure the excise tax on alcohol and tobacco products filed by Senators Miriam Defensor-Santiago and Panfilo Lacson.
The panel is also hearing House Bill No. 5727, the counterpart measure already approved by the House of Representatives.
“Who will be your collecting agents here? What brand are we talking about? Will it be the same products, the same companies? Will it be a different company? A different brand? Who will be paying for the incremental revenues?” Recto asked Henares.
Henares said she could supply the information but would not be able to provide the identities of the companies. She said she would be able to provide the amounts expected to be paid but the companies would have to be identified only in codes.
In last week’s hearing on the sin tax measures, Senate President Juan Ponce Enrile and Recto warned of the adverse effects of raising the taxes too high.
Enrile warned against smuggling becoming prevalent while Recto warned of revenues going down.
“Once you propose radical changes, the problem there is that there is no way to determine who will pay what, and you might be destroying the revenue base to begin with and that’s our biggest concern and you will come back to us to ask for a new tax measure,” he said.
Interviewed after the hearing, Recto doubted that the government’s revenue target was realistic.
“It’s easy to come up with a number of plus P60 billion,” he said.
He agreed with former budget secretary Benjamin Diokno’s observation that the government projection of additional revenues of P60 billion a year and P500 billion in five years was one for Ripley’s “Believe it or Not.”
Recto also expressed puzzlement at the government’s position that it was aiming to make additional revenues while also trying to discourage the public from smoking cigarettes and drinking alcohol.
“Isn’t it inconsistent to say let’s not drink and smoke too much? How can we collect the additional taxes if we’d decrease the consumption?” he said.
Chief News Editor: Sol Jose Vanzi
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