Court junks TRO bid vs. sin tax law implementation

A Manila court has junked the petition filed by liquor manufacturers seeking the issuance of a temporary restraining order (TRO) against the implementation of the controversial Sin Tax Reform Act of 2012. In a decision dated January 16, the Manila Regional Trial Court affirmed the government's argument that no court is authorized to restrain the collection of taxes as provided under Sec. 218 of the National Internal Revenue Code (NIRC). The court said the denial was also due to the absence of the petitioners’ clear legal right to be protected over the right of the state to collect taxes. It pointed out that a preliminary injunction or TRO may be issued only in the existence of a clear and unmistakable right to be protected, and an urgent necessity to prevent serious damages. The court also argued that the taxpayers’ property right should take a step back to the state’s “paramount” need to generate funds to sustain its functions. The law, the implementation of which started on the first day of 2013, seeks to increase excise taxes on alcohol and tobacco products. In its first year of implementation, the law is seen to generate for the government additional revenues worth P33.96 billion, of which P23.4 billion will come from cigarettes, P6.06 billion from distilled spirits and P4.5 billion from fermented liquors.  In its petition filed last week, the Distilled Spirits Association of the Philippines (DSAP) said some provisions of the law are unconstitutional and will result in the collapse of the local distilled spirits industry.   They said the implementation of the bill would require them to pay excise taxes twice on ethyl alcohol used as raw materials and which was subsequently compounded, translating to very substantial losses.   Under the sin tax measure, locally-produced compounded liquor are treated differently from imported liquor as they are taxed twice, first on the raw material, and again on the finished product. Imported liquor, they said, are only taxed on the finished product. DSAP members include the country’s biggest liquor manufacturers, namely  Emperador Distillers Inc., Tanduay Distillers Inc., Ginebra San Miguel and Destilleria Limtuaco Inc. — KBK, GMA News