BIR confident DOF-backed ‘sin’ tax bill will be passed

Internal Revenue Commissioner Kim Henares remains confident the Department of Finance-backed version of the “sin” tax bill would be passed and enacted into law despite a Senate version that halved the expected tax take.

In an interview, Henares said her confidence was boosted by the House of Representatives’ and Malacañang’s continued support for the so-called amended Abaya bill of the “sin” tax measure, or the version that the lower chamber of Congress submitted to the Senate.

Cavite Representative Joseph Emilio Abaya, who is the main author of the House bill, is now the secretary of the interior and local government.

“The House has said they stand by their version,” Henares said. “The President has also expressed his support for the DOF-backed version of the bill.”

Last week, in a speech at the 38th Philippine Business Conference at the Manila Hotel, President Aquino said he was “counting on the solidarity of our legislators in the sin tax bill which can only improve our fiscal situation.”

The Chief Executive said that with the bulk of the tax revenues generated from the proposed measure, the government would widen access to and improve health services for all.

Observers, including at least one of Finance Secretary Cesar V. Purisima’s lieutenants, believe the final version that would be enacted would be somewhere between the DOF-proposal and the one that is acceptable to the tobacco industry.

For such observers, the standing question is how far the final version will be from the DOF proposal.

During the annual meeting of the Asia-Pacific Tax Forum held at the Makati Shangri-La Hotel earlier this month, Finance Undersecretary Jeremias N. Paul told delegates that based on the experience of the DOF, the enacted version of a tax measure was not the one that the department had proposed.

Paul said the resulting tax law usually contained many changes from the DOF proposal or “sometimes altogether different.”

“It’s still too early to tell [what the final version of the sin tax bill would be like, but] we will continue to push for our original position,” he said.

Henares said she was looking forward to the resolution of the long-drawn issue. Malacañang has been pushing for reforms of the excise tax system on tobacco and alcoholic drinks even during the Arroyo administration.

“We will try to get the best deal that we can” during the Senate plenary debates, the BIR chief said.

“Gusto ko ng respite sa sin tax na ‘yan. Nakakapagod na (I want a respite from this sin tax matter. It’s rather tiring),” she added.

Last Wednesday, Senator Ralph G. Recto said that under his committee’s version, cigarettes could yield between P9.8 billion and P14.8 billion in additional revenues during the first year of implementation. At the same time, alcoholic drinks could contribute P5.2 billion to P7 billion.

But based on the House version, the BIR expects incremental excise tax revenues to amount to P31.4 billion in the first year of sin tax reforms, including P26.9 billion from cigarettes, P1.4 billion from distilled spirits and P3 billion from fermented liquor.

When the Senate version was made public, Purisima said it fell “short of what we need.”

Henares herself told reporters that members of the BIR staff who put in a lot of time cooperating with the Senate committee on ways and means, which Recto chairs, “felt betrayed.”

Sen. Juan Ponce Enrile reacted, saying it was not for Henares and the BIR to feel betrayed because crafting the law is the Senate’s job and not of the BIR.