Tax it or leave it

This “sin tax” bill of the Aquino (Part II) administration, supposedly, at least according to certain Cabinet members, is both revenue and health bill rolled into one.

But then again it may be something else.

Seeking to overhaul the ad valorem tax system on “sin” products, meaning, alcohol and tobacco, the bill breezed through the House in record time. Its passage in fact went so fast that weighty issues, raised by congressmen during the plenary session, were left hanging. Thus the Senate now is trying to unclog the whole messy “sin tax” affair.

A couple of weeks ago, from what I gathered, the Senate ways and means committee, chaired by the level-headed Sen. Ralph Recto, conducted a closed-door session with executives of companies affected by the “sin tax” bill, mainly local alcohol and cigarette manufacturers.

Surprisingly present in the hearing, apparently as a “guest,” was a certain James who happened to be a top executive of British American Tobacco, or BAT, the foreign firm making “Lucky Strike” and “Camel” cigarette brands, which has no manufacturing facilities in the Philippines.

In the local tobacco industry, it is widely known that, for the past several years, BAT has been pushing for changes in the ad valorem tax system for cigarettes, particularly during the cute administration of Gloriaetta, supposedly to ease its entry into the Philippine market.

Recto must have heard of all that talk about BAT, so that during the recent closed-door session, he brought up the idea of a “sweet spot,” some sort of a “compromise,” in the ad valorem tax system, in what the senator termed as a way to resolve the conflict over the proposed bill.

And that was, well, the reduction in the ad valorem tax rate on imported brands of luxury cigarettes, the highest tax rate in the present system, from P28 per pack to P12 per pack.

It so happens that the cigarette brands of BAT currently fall under the highest tax bracket. Thus the “compromise,” as envisioned by Recto, would in effect cut the tax rate on BAT cigarette brands by almost 60 percent.

In comparison, under the House version of the “sin tax” bill, the tax rate on all low-priced cigarette brands, which are all local brands, will have to be increased by an amazing 700 percent.

Now, certain Cabinet members in the Aquino (Part II) administration have been trying to promote the new “sin tax” bill as a necessary measure, needing even the imprimatur of our leader Benigno Simeon (aka BS) as an urgent bill, because the government needed to raise its tax intake from cigarettes and alcohol products.

By tagging the bill as a revenue measure, the boys of our leader BS in effect wanted to justify the 700-percent increase in the tax rate on local cigarettes, the cheap brands that appeal to the ordinary people.

In short, since the Aquino (Part II) administration needs more money, the boys of our leader BS want to take it from the low-income people.

Complications arose in the Recto proposed “compromise,” however, because the senator seemed to be cold towards the House version seeking to impose a 700-percent increase in the tax on cheap brands.

From what I gathered, the “guest” from BAT named James still raised objections to the Recto compromise. The “guest” wanted the Senate to follow the House version, thus imposing the 700-percent increase, or even a higher rate, such as a thousand percent increase. And so Recto in effect chastised the guest. Take it or leave it—something like that.

Anyway, if the boys of BS in the Cabinet will have their way, they want all cigarette brands to have a single tax rate, thus leading to the thousand percent increase in the tax on cheap brands, while lowering the tax rate on luxury (imported, at that) brands.

In effect, when they smoke, Mang Pedro pays the same tax as Don Manuel.

The wonder of it all is that, regarding the “compromise” brought up by Recto, which was to bring down the tax rate on luxury brands, such as those carried by the foreign firm BAT, the boys of our leader BS have kept quiet.

And everybody thought that they want to overhaul the tax system, thus raising the tax rate on cheap brands, because the government needs to raise its revenue intake. Well, so far I hear no objection to the proposed cut in the tax rate on luxury brands.

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Sports sectors are now becoming part of big business, and it is because the president of the Philippine Olympic Committee, former Rep. Jose Cojuangco Jr., known as “Peping” in the business community, who happens to be an uncle of our leader BS, wants large business groups to adopt not only the athletes in our national teams but also whole sports sectors such as athletics.

From what I heard, still smarting from steady attacks in media for the bad showing of the Philippines in sports competitions abroad, Cojuangco is stepping up talks with big business groups regarding his adoption program.

A big company in the food business, for instance, is said to be really interested in taking care of track and field—also known as athletics.

As part of the comprehensive program, Peping wants to set up a sports training facility in the former US air base in Clark. Apparently, he already talked to the government outfit in charge of the former military base, the Clark Development Corp., justifying his proposal with a need for “clean air” environment as the training camp for athletes carrying the Philippine flag.

In short, away from the city!

But, according to word going around in business, before Uncle Peping can even attract the big business groups to support his master plan, the businessmen want him to clean up the various national sports associations, or the so-called NSAs, which have been for years mired in internal squabbling, issues over money, and even criminal acts like human smuggling.

For instance, Uncle Peping already pushed more than 20 NSAs to follow the requirement of the IOC [the International Olympic Committee] for the associations to register with the SEC, or the Securities and Exchange Commission.

That way, the NSAs will have to abide by the rules and regulations on non-profit, non-stock corporations. It follows that they have to register their by-laws with the SEC, thus avoiding the manipulation of certain groups over the NSAs, in effect perpetuating themselves as heads or officials of the associations.

Now, the hard question is this: Why do those groups want to control the NSAs, as they have done so for several decades now?

The answer is, of course, business. There is definitely money in any sport. For one, the NSAs receive funding from the government. Also, there are other ways to make a killing in sending Filipino athletes to competitions abroad.

Among them, according to word in business, is human smuggling, such as when Filipino athletes do not come home from the competition abroad, whose identities are then taken by some foreigners, as a stepping stone for getting visas to another country.

That could be the only reason why some NSAs send unknown teams or athletes to tournaments abroad. And big business groups are wary of the racket. Indeed, Uncle Peping has some hard work to do to convince them to join him in the program.