Sin tax bill, 2013 proposed budget high on Senate priority list

The 2013 national budget and the sin tax reform bill are high on the Senate list of measures to pass, but deliberations on the proposed tax structure for tobacco and alcohol products will start on Tuesday, Nov. 6.      “Both the budget and sin tax are priority all over other legislation,” Senate President Juan Ponce Enrile told reporters Monday.   Deliberations on the sin tax measure would be based on the controversial committee report by Sen. Ralph Recto, who resigned as Senate blue ribbon committee chair after his proposed version of the bill was criticized as pandering to the wishes of the tobacco industry.   Asked about the fate of another controversial measure – the reproductive health bill – Enrile said it has been tagged as the Senate’s second priority and not as urgent as the budget and sin tax bills in terms of legislation.   Sen. Franklin Drilon, acting chair of the ways and means committee, said the debates can start on Tuesday. ”So, tomorrow afternoon we will start  defending the committee report and go through the process of amending it at the appropriate time and submit it to the floor,” Drilon told reporters Monday.   Drilon said he will try to have the sin tax bill passed this week and sponsor the proposed national budget in the third week of November.   “What we are working on – as a target – is that by January 1, there is a new budget,” he added.   The process, Drilon said, was discussed with Recto and Enrile.   In a privilege speech, Recto moved to withdraw the committee report which, however, remained on the floor as he could not remove it on his own.   In an interview, Recto said he agreed with Drilon’s proposal – noting, it was the wish of President Benigno Aquino III – so as not to delay the passage of the bill. But Recto wanted his signature deleted from the committee report.   He said he will be active in the debates and vowed to fight for a realistic and responsible revenue measure. “I will not be an obstacle, but it will be my job to show that the P60 billion Palace-backed proposal is unrealistic,” Recto noted.   Drilon claimed it doesn’t really matter if he and Recto have different versions of how much the reformed sin tax law should generate in revenue terms. In the end, the Senate – as a whole – would decide on the final version of the bill, he added.   “We will be endorsing a committee report that proposes an increase on both cigarettes and liquor… But on the rates, we will present amendments,” he said. Sharing a single view   In spite of the differences on the revenue aspect of the measure, Drilon noted the senators share a single view on the need for higher taxes on alcohol and tobacco products particularly to bring down the number of smokers in the country.   “We will defend the need to increase the taxes. We will defend the fact that – primarily – this is a health measure more than a tax measure, because it is accepted that smoking is a major cause of mortality in the Philippines,” he said.   “It is accepted that, as a policy, excise tax is an effective tool of reducing smoking in the country. So, it is along these lines that we will defend the need to increase sin taxes on cigarettes which have lagged behind in terms of the GDP growth of the Philippines,” he added.   The Senate intends to pass the sin tax bill before the proposed 2013 budget. “That is our intention: to pass the sin tax first so that we will have a better feel of the budget once the sin tax is passed,” he said.   There is a P24-billion funding gap between the P54 billion proposed budget of the health sector in 2013 and P77.4 billion which the government actually needs to implement health projects, the Senator noted.   Among the programs that might be affected by the non-passage of the sin tax bill are the enrolment of 5.2 million families more in the PhilHealth, the construction and repair of provincial and regional hospitals, and the strengthening of public health programs – especially immunization.   “We have to pass the sin tax bill in order that we can fill the financial gap on the health sector. The government cannot appropriate P77.4 billion because of the deficit level,” he said.   “If we don’t get additional budget under the sin tax, we would not be able to address the budget gap and we should not be able to deliver the services that the government should deliver,” he said.   Asked what figures would be acceptable to all senators since Recto pegged it at P15 billion – which some senators, administration officials civil society member opposed. Malacañang wanted the new measure to generate at P60 billion proposal of Malacanang is unrealistic to many lawmakers, Drilon noted there is no definite figure yet.   “At the very least, it is not just P24 billion because, remember, tobacco farmers are entitled, under R.A. 7171, to 15 percent of the increment. That’s why I say at least, because if you only say P24 billion you will not reach the tobacco farmers who are entitled to 15 percent increment… of whatever is the total sin tax collection,” he said.   In a separate interview, Senator Edgardo Angara said they have to pick somewhere between P15 billion and P60 billion.   “We’ve got to strike at the sweet spot that will satisfy the health [sector] and [revenue] expectations. At the same time, not to destroy the livelihood of our colleagues from the north [Luzon],” he added. — VS, GMA News