BIR accepts lower expected revenue from approved House 'sin tax' bill

  "We're glad that it has passed the committee level," Henares said. House Bill 5727 managed to survive through debates and revisions at House committee on ways and means as an urgent legislative priority of the Aquino administration.   However, committee members were able to introduce changes to the bill that had the effect of significantly reducing is revenue-generating capacity.   "We had certain 'non-negotiables' and we got those provisions," Henares pointed out.   The BIR and its allies in the House managed to bring down to two tiers the tax rate for cigarettes.   The compromise bill also sets three tiers of rates for distilled spirits.   In the latest version of HB 5727 provides for the indexation of sin taxes—automatically raising the rates by eight percent every two years.   In the original version of the bill by Cavite Rep. Joseph Emilio Abaya, the administration wanted just one rate for all alcohol and tobacco products of whatever variant.   Landmark legislation   Earlier, Finance Secretary Cesar Purisima hailed the passage of the compromise version the House committee approved.   “This approval marks a landmark in the history of the Philippine legislature, as it paves the way for a significant restructuring of excise taxes on tobacco and alcohol after more than 15 years,” Purisima said.   “We look forward to having this bill passed by next month, and enacted into law within the year,” he added.   Earlier, Budget Secretary Florencio Abad hoped the bill would become law by June 2012, so that some of its revenue-generating effects could be felt sooner rather than later.   Purisina noted that eventual enactment of the bill will enable the country to comply with its fair trade commitments to the World Trade Organization.   Other countries have been critical of the Philippines’ excise tax system for what they claim are “discriminatory” tax rates against foreign brands. More funds for public health   Purisima also noted the public health and social impact that raising sin tax rates will have.   “These reforms will enable us to increase the cost of tobacco and alcohol addiction while at the same time providing government with additional resources to respond to the public costs of these vices,” the Finance chief added.   .Action for Economic Reforms (AER), a non-government organization said passage of HB 5727 “will be a milestone in our country’s quest for health and inclusive development.”   AER also said the higher sin tax rates “will shield the youth and the poor from our nation’s number one cause of death: smoking.”   It also cited the bills provisions that provide for alternative livelihood to tobacco farmers.   AER said HB 5727 “will increase resources for local governments and congressional districts to better serve their constituents, fund the universal health care program, and significantly advance our country’s macroeconomic and fiscal standing." — ELR, GMA News