PHNO-HL: PALACE FUMBLES ON BACKING REVENUE GOAL FROM 'SIN' TAX

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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