Senate votes 10-9 to adopt bicam report on sin tax bill

December 11, 2012 11:24 pm 

MANILA, Dec. 11 -– Voting 10-9, the Senate ratified on Tuesday night the bicameral conference committee report on the proposed measure on Sin Tax Reform Bill which aims to collect P33.96 billion incremental revenue for the government’s universal health care program.

”I have the honor to report to this august chamber the bicameral report on the reconciled bill,” Senator Franklin Drilon said, referring to House Bill 5727 and Senate Bill 3299 or "An Act Restructuring the Excise Taxes on Alcohol and Tobacco Products."

Drilon said the report has been "the product of the hard work and dedication of all members of the panel from both houses of Congress" as well as the valuable assistance of their technical staff.

It took Drilon, chairman of the Senate panel to the bicameral body and sponsor of the bill in the Senate, over two hours to explain to his colleagues the bicameral report which was signed on Tuesday morning.

Those who voted in favor of the bicam report include Drilon and Senators Edgardo Angara, Pia Cayetano, Miriam Defensor-Santiago, Panfilo Lacson, Sergio Osmena III, Francis Pangilinan, Aquilino Pimentel III, Lito Lapid and Antonio Trillanes IV.

On the other hand, those who voted against the adoption of the report are Senate president Juan Ponce Enrile, Senate president pro-tempore Jinggoy Estrada, Senate majority leader Vicente Sotto III and Senators Francis Escudero, Ferdinand Marcos Jr., Ralph Recto, Gregorio Honasan II, Ramon Revilla Jr., and Joker Arroyo.

Arroyo questioned the Senate panel over its failure to defend the Senate version which recommended P39.5 billion incremental revenue and 60-40 burden sharing between cigarette and alcohol industries.

Recto said the bicam report favored the imported over locally-produced products.

”It is clear that under this proposed bill, taxes on imported would go down while taxes on local products would go up. This cover both the cigarettes and alcohols,” said Recto.

Recto and Lacson expressed fears that the provision which allocated 20 percent of the revenue to district and municipal hospitals would lead to abuses of some local government officials.

Enrile echoed Recto’s observation that the government is allegedly favoring the foreign over the local products in the imposition of excise taxes.

Under the bicam final version of the bill, the government is expected to generate P33.96 billion in additional revenues, in its first year of implementation in 2013.

”Of the amount, P23.4 billion will come from increased taxes on tobacco, while P10.56 billion will be generated from taxes on fermented liquor and distilled spirits depending on its historical burden sharing,” Drilon said.

Drilon said that the final burden sharing between tobacco and alcohol products for 2013 will be 69 percent for tobacco and 31 percent for alcohol.

“It was a give and take situation and we came up with a compromise of approximately of 69-31 percent instead of 60-40 in the Senate and 87-31 on the part of the House,” Drilon said.

The total rate of excise taxes that will be collected on a five-year period, starting 2013 and ending in 2017, is as follows:

For tobacco, the total increment for 2013 is P23.4 billion; P29.56 billion in 2014, P33.52 billion in 2015, P37.09 billion in 2016, and P40.9 billion in 2017 for a total of P164.47 billion.

For fermented liquors or beer, it's P4.5 billion in 2013, P6.99 B in 2014, P9.52 B in 2015, P12.06 B in 2016, and P15.646 B in 2017, or a total of P48.53 B incremental tax in the period of five years.

For distilled spirits, it is P6.06 billion in 2013, P6.31 B in 2014, P7.59 B in 2015, P7.71 B in 2016, and P7.82 B in 2017, and therefore the five-year period would have a total of excise tax for the distilled spirit in the amount of P35.34 billion.

On a yearly basis, for the three products, the total excise tax collection for 2013 is expected at P33.96 billion, P42.82 billion in 2014, P50.63 billion in 2015, P56.86 billion in 2016, and P64.18 billion in 2017. For the five-year period, the total incremental revenues for the three products would be P248.49 billion.

According to Drilon, after deducting the allocations under Republic Acts 7171 and 8240, 80 percent of the remaining balance of the incremental revenue will be allocated for universal health care under the National Health Insurance Program; the attainment of the Millennium Development Goals and health awareness campaigns.

“The remaining twenty percent will be allocated nationwide based on political and district subdivision for medical assistance and health enhancement facility programs, the annual requirement of which will be determined by the Department of Health,” Drilon said.

RA 7171 is the Act promoting the development of farmers in the Virginia tobacco producing provinces, while RA 8240 amends certain sections of the National Internal Revenue Code.

Once signed into law by President Benigno S. Aquino III, Drilon said an additional 5.2 million Filipino families will be enrolled to the Philippine Health Insurance Corporation (PhilHealth) in 2013, allotting P12.5 billion of the amount to be generated from the proposed measure.

”By 2014, the whole amount of P25 billion for the payment of premiums in PhilHealth of the 10.4 million families will be sourced from the revenue to be generated from the excise tax on sin products,” Drilon explained.

Drilon said 15 percent of the P23.5 billion incremental revenue to be collected from tobacco industry will go to the Virginia tobacco farmers in northern Luzon.

To address concern on possible increase of smuggling of the sin products, Drilon said the bicam adopted the Senate version amending Section 8 which requires unique, secure and non-removable identification markings.

Drilon said the copy of the bicam report will be forwarded to Malacanang within this week hopefully for the President's imprimatur before Congress adjourns for the Christmas break next week. (PNA)

LAM/JFM

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