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Recto sin tax version called 'abject surrender to tobacco lobby'

October 11, 2012 12:44pm

(Updated 7:17 p.m.) When Sen. Ralph Recto unveiled what was supposed to be a consolidated version of the various Senate sin tax bills, he called it "realistic and responsible."

His colleague Sen. Miriam Defensor-Santiago had a different point of view. "It is an abject surrender to the very rich and very powerful tobacco and alcohol lobby," she said, adding that it had little resemblance to the bill that she had filed.

The Senate ways and means, chaired by Recto, had recommended on Wednesday a sin tax measure that would raise P15 billion to P20 billion in additional revenues for government.
This is lower than the bill approved by the House of Representatives last June which is expected to raise P31.35 billion in the first year of implementation and much lower than the proposal of the Aquino government which is expected to raise P60 billion.

This means that less heavily taxed cigarettes would be priced lower, helping sustain one of the highest smoking prevalence rates in the world, and a leading killer of Filipinos.

While not accusing Recto of being in the pocket of lobbyists, Bureau of Internal Revenue Commissioner Kim Henares did not hide her dismay.
“Our Secretary of Health has already said he was very disappointed… Those statements basically reflect how I feel,” Henares told reporters on the sidelines of case filling at the Department of Justice. “I don’t have to say more than that.”
Henares, who heads the government’s top revenue collection agency, noted the additional tax take from the measure would go to the Department of Health, not state coffers.

The Aquino administration will push for the amendments to the sin tax measure as the committee report will still be tackled on the Senate floor. “We’re going to advocate [for the P60 billion]. It will still go to plenary,” according to the BIR chief.
“It is a health measure… Whatever is collected from the sin tax… lahat ay mapupunta sa health,” the BIR chief said.
“Kung ang nakokolekta natin sa excise tax sa sigarilyo ay P45 billion, pero ang medical expenditures ay P144 billion…” Henares noted, saying government would be ahead in terms of revenues versus expenditures “kung walang maninigarilyo...”
In a statement, Sen. Santiago said she was shocked by Recto's committee report.
"I am gobsmacked – speechless with amazement – at the committee report. It bears no recognizable resemblance to my bill. It is an abject surrender to the very rich and very powerful tobacco and alcohol lobby," she said.
Santiago is the principal author of Senate Bill No. 3249, "An Act restructuring the excise taxes on alcohol and tobacco products."
The bureau collects around P60 billion in excise taxes from tobacco and alcohol products and, through the new sin tax measure, the executive department expects to add another P60 billion.
Under her bill, Santiago said government stands to gain P60 billion in additional tax collections in the first year.

In an interview with reporters, Senator Franklin Drilon said he is recommending a two-tier system covering the highs and lows of taxing sin products.
The lower level should be equivalent to a tax rate of P15 and the high-end at P30, Drilon said, noting the high and low should be merged in a single rate after two years.
He said the bill would likely be approved by mid-November. "We just have to move quickly," he said.
“My agreement with Senator Recto and other senators is that we will finish the sin tax debates before we commend the debates on the budget in mid-November," Drilon added.
In a separate interview with reporters on Wednesday, Recto said his bill is not a watered-down version but a realistic, responsible version of the the government’s proposed measure.
"This is not watered down, because the proposal of the Department of Finance… was based on rosy assumptions and rosy projections," he said.
Government's projection of P30 billion in additional revenues on tobacco is unrealistic, according to the senator.
"There is a point of diminishing return. You want to wipe out the deficit? Patawan natin ng kada cigarette P100... We wipe out the deficit, pero may bibili pa ba nun? Makokolekta pa ba yun? Sa papel lang makokolekta yun," Recto noted.

Still, he said he is open to amendments. "This is a committee report. May proseso. Eto ang recommendation ko. Ang iiral dito ang kagustuhan ng Senate for a Senate version.
“We’re 23 senators and I’m just given the task of putting out a report. Whether this will be further reduced or increased, will be subject to a vote," Recto added.

In a press briefing Thursday, Presidential Spokesperson Edwin Lacierda said that Malacañang will continue to push for its own version of the law.
The Health Department earlier said the sin tax bill crafted by the executive branch could boost the universal health program by 43 percent. — With a report by Patricia Chiu/VS/HS, GMA News
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