Groups hit House bill on ‘sin’ tax

Local and foreign business groups are backing the Department of Finance’s push for the full implementation of the sin tax law passed in 2012 amid moves in Congress to amend the law to retain a two-tier tax system for tobacco products.

The Philippine Business Group and the Joint Foreign Chambers (JFC) said in a statement that the original objectives of Republic Act No. 10351 was to enhance the government’s health goals and strengthen its tax administration efforts.

The coalition includes the Philippine Chamber of Commerce and Industry and the JFC, itself an alliance of the American, Australian-New Zealand, Canadian, European, Japanese and Korean chambers in the Philippines as well as the Philippine Association of Multinational Companies Headquarters Inc.

“Since the adjustment of excise tax rates for ‘sin’ products in 2013, together with other reforms [under the law], we have noted the reduction of smoking prevalence and the significant increase in government revenues, which have supported various health projects and farmers’ livelihood programs,” the allied groups said.

Under RA 10351, excise tax rates are scheduled to be unified by 2017, intended to help simplify tax administration, optimize revenue collection and reduce the system’s vulnerability to tax evasion and corruption.

“However, there is an aggressive push in Congress to amend Section 145 (C) of the National Internal Revenue Code of 1997, as amended by RA 10351, for the purposes of preventing the scheduled shift to a unitary tax for cigarettes packed by machine in January 2017,” the groups said.

They were referring to House Bill (HB) 4144, which proposes to retain the two-tier system for tobacco products and to increase the excise tax rates for both the lower and higher brackets to P32 per pack and P36 per pack, respectively.

“The proponents of this legislative measure claim that their intent is to protect the welfare of the local tobacco farmers,” the chambers said. “However, the lack of proper consultation with stakeholders, including the local tobacco farmers themselves, and the absence of an impact assessment study validating the need for such amendments leave much room for concern and doubt.”

The business groups called on lawmakers to allow the sin tax law to run its course.

“We believe that RA 10351 was carefully and properly designed to meet the desired national targets and has undergone proper consultations and thorough deliberations with key stakeholders,” they said. “It is a good and sufficient law that would lead the government to attain its health and revenue goals.

The Philippine Tobacco Growers Association (PTGA) reiterated its “strong objection” to the HB 4144, saying this “will only bring hardship to the farmers who are still reeling from the huge tax increase in 2013.”

PTGA president Saturnino Distor said in a separate statement that, contrary to some media reports, he has not changed his mind about opposing the bill.

Distor said he had, in fact, refused to sign a position paper of support for HB  4144 that the National Tobacco Administration (NTA) offered to him during a committee hearing at the House of Representatives held last Dec. 5.