Congress faces balancing act on proposed amemdment to sin tax law

MANILA-- Lawmakers pushing for the passage of a proposed bill seeking to amend the Sin Tax Reform Law on Monday stressed that the proposal to retain the present two-tier tax rate on cigarettes from going to a unitary tax system by January not only generates more revenues but also protects the country's tobacco farming industry.

Quirino Rep. Dakila Carlo Cua, chairman of the House committee on ways and means, said the proposed amendment to the Sin Tax Reform Law of 2012 is a balancing act of Congress as it takes into consideration the original objective of RA 10351, which proposed higher excise tax rates for tobacco products on one hand, and the livelihood of Filipino tobacco farmers on the other hand.

RA 10351, which took effect in 2013, provides that for 2017, cigarettes regardless of net retail price should have a unitary tax rate of Php30 per pack.

Cua said the upcoming unitary taxation is unreasonable because this is tantamount to imposing the same amount of tax in buying either an imported Mercedes-Benz or an owner-type jeep.

"Would you impose the same PHP1 million excise tax to both vehicles? Doing that would result in the displacement of the local manufacturer of owner-type jeep," he said.

"The situation would be similar to Filipino tobacco farmers who are about to lose their livelihood under a unitary system that will be implemented starting January next year unless the Sin Tax Law is amended," Cua stressed.

Under House Bill 4144 filed by ABS party-list Rep. Eugene Michael de Vera, a pack of cigarettes with a net retail price (excluding excise and value-added tax) of Php11.50 will be taxed at Php32; while a pack with a net retail price of more than Php11.50 will be taxed at Php36.

Cua, whose committee approved the proposed amendment, said the proposal will protect local tobacco farmers, raise more revenues for the Duterte administration and promote public health because raising tax will help lessen the number of smokers.

"Our aim is to strike a balance. We could only achieve that if we can pass a law where the livelihood of our tobacco farmers are protected, where we have reduced the prevalence of smoking and where we can increase government revenues to fund its various projects," the lawmaker said.

House Deputy Minority Leader and BuhayPartylist Rep. LitoAtienza agreed with the wisdom of the proposal not to impose unitary tax saying this would kill the livelihood of tobacco farmers in the country.

"That unitary tax would kill the local farmers immediately because they cannot compete with foreign tobacco growers," Atienza said.

"While we promote the objectives of the good health, and at the same time increasing taxes, let us not be unfair to our local industries," he said.

In the meantime, House Majority Floor Leader and Ilocos Norte Rep. Rodolfo FariAas, underscored the importance of passing the bill as a revenue-increasing measure and also as a measure to level the playing field.

"It is plain common sense. Which will provide higher revenue: is it in unitary where all brands pay a flat rate of Php30 per pack or is it in the two-tier system where the lower priced brand will pay Php32 and the other one pays Php36?" he said.

"If you are buying a more expensive brand of cigarette, the tax should be higher. And rightfully so because our taxation is based on progressive taxation, -- the higher you can afford, the higher you pay," FariAas said.

FariAas, who chairs the powerful House committee on rules, said the bill will be approved on third and final reading this week before Congress goes on Christmas break.

Source: Philippines News Agency