European Chamber backs excise tax reform bill

The European Chamber of Commerce of the Philippines (ECCP) has encouraged the passage of House Bill 5727 “as soon as possible and without delay” as it noted that the reform bill on excise taxes, particularly for alcohol and tobacco, is long overdue.

Henry Schumacher, ECCP vice president for external affairs, in a statement issued Monday expressed full support for the reform bill, with the belief that it promoted the principle of non-discrimination, simplicity and transparency.

The group, according to Schumacher, welcomed “a simplified specific rate structure for beverage alcohol as it supports responsible drinking decisions to be made as the tax is based on the level of alcohol content in the product rather than on price, quality or origin.”

“While ECCP is aware of the concern expressed by the local companies, it strongly disagrees with the accompanying argument that imported products are in turn being favored by the (HB 5727, which was filed by Cavite Representative Joseph Emilio A. Abaya). The Abaya bill is merely addressing a longstanding violation of WTO principles by equalizing the rates on alcohol and creates a more level playing field for tobacco products,” Schumacher explained.

Consequently, ECCP also said it opposed any solution or proposal that would maintain discrimination between local and imported products.

“In this context, ECCP supports the policies of the Department of Health and the Department of Finance to use the tax revenues from this reform to support the poor, expand medical support and develop employment opportunities,” he added.

Local industry players and thousands of workers earlier opposed the proposed tax hike on tobacco and alcohol products, saying the measure is designed to kill local industries and displace workers.

Previous reports had quoted Olivia Limpe-Aw, president of the Distilled Spirits Association of the Philippines Inc. (DSAP), as saying that the finance department’s plan to collect more than P62 billion revenues through Abaya’s bill is unrealistic as it will give relief to imported brands while taxing out of the market local products from which the agency intends to mainly collect.

The government has found an ally with the group Action for Economic Reforms, which last March gathered former high-ranking officials of the departments of finance and health to call for tax reforms.

Jo-ann Latuja, AER senior economist, said that the Abaya reforms are vital to fixing a faulty tax system while lessening consumption of the number one cause of death in the country.

“If this bill is not passed, the revenue losses could be the least of our concerns, since a health crisis is already brewing in our midst that endangers the young and poor populations of our country,” Latuja said.