P-Noy hopeful Congress will pass sin tax bill next year

Manila, Philippines - President Aquino is hopeful that his priority sin tax reform bill will be approved before the current 15th Congress ends in July next year, or after the May 2013 midterm elections.

“I believe the sin tax reform bill will be passed by this Congress,” he told journalist Coco Alcuaz, who hosts the Inside Business program of the Lopez-owned TV giant ABS-CBN which is aired at its 24-hour cable channel, the ABS-CBN News Channel (ANC).

Aquino certified as urgent last May 16 House Bill 5727 which seeks to increase cigarette and liquor taxes and was approved in plenary by the House of Representatives before it adjourned last June 7.

Budget Secretary Florencio “Butch” Abad said the House’s approval of the priority measure could inject a total of P33 billion in revenues to government coffers, especially now that more funds would be poured into social services and infrastructure.

HB 5727 provides new rates for sin taxes, or products like cigarettes and liquor.

“Through this groundbreaking move, we are much closer to reforming the current tax regime for tobacco and alcohol products which has been in place for more than 15 years and has proven ineffective and outdated,” Abad said.

Abad hopes the Senate would adopt the House version, as the new “tax system would boost tax collection efficiency in the country, as well as increase government revenues by around P33 billion in the first year of its implementation.

“Once approved, 15 percent of sin tax revenues will also be used to support tobacco farmers, who may be adversely affected by the measure,” he said, adding revenues would go to health services and development and rehabilitation of health centers nationwide.

Beneficiaries would include “tobacco- and non-tobacco growing provinces.” Restructuring the sin tax system, according to the DBM chief, “will (also) go a long way toward improving the health and well-being of Filipinos.”

“In its original form, HB 5727 was expected to generate at least P60.7 billion, which will be channeled to 81 beneficiary provinces. This is a far cry from the 16 provinces now being supported by the present excise tax scheme,” Abad said.

“We enjoin our senators to fully support the Aquino administration’s bid to overhaul the excise tax system, not only to advance sustainable fiscal growth in the country, but also to protect the best interests of the Filipino people,” he said.

The amendments changed the rates for alcohol and tobacco products, with some going down and others going up.

In the case of liquor, tax for beer went down, while the levies for expensive wines went up.

In the case of cigarettes, the proposed new tax rates fell from P22 per pack to P12 for brands with a retail price of P11.50 and below, and from P30 to P28 for those with a higher retail price.

The present four classifications of cigarettes would be reduced to two. The present tax rates range from P2.72 per pack for low-priced cigarettes to P28.30 for premium brands. The rates are still based on 1996 retail prices.