The tobacco of sin tax bill

British American Tobacco insists on the House of Representatives approved version of the Sin Tax Reform Bill that would provide additional revenue of P31.35 billion in the first year of implementation.

In a position paper, BAT asked lawmakers to pass a bill that would level playing field in the industry, not the report of the Senate committee, Senator Ralph Recto had approved. “The position of BAT on the Sin Tax Reform Bill has consistently advocated two principles in favor of equal treatment and support fair and equitable government revenue from the industry,” BAT said.

Recto’s committee had approved a bill that would transfer only P15 billion additional revenues from sin taxes, only half of P31.35 billion to be raised from the version that was approved by the House, and only a quarter of a billion P60 initially targeted at the Ministry of Finance (DOF)-support bill. The American Tobacco Company said that the industry needs to remove the old classification freeze brands and crumbling premiums and high levels.

“Through the process of tax reform sin, the Aquino administration took a bold and courageous step to correct these disparities,” BAT said. BAT said excise revenue that the tobacco industry in the Philippines has caused not kept pace with the growth in other sectors for many years. It was a very large extent the result of unfair and unduly low excise system, BAT added. BAT hopes that the final outcome of the process of reforming the tax would be a sin to translate into unmatched in the industry.

 “We respect the Philippine legislative process, and I hope and trust that it will deliver an equal, fair and equitable taxation, and above all the result that the best interests of the country,” said BAT. La Union Rep. Victor Ortega, head of the Northern Luzon Alliance (PLA), said Bill Recto is “the best and more realistic” version. “Recto proposal is more reasonable than the version that came out of the house because it will raise additional funds (where) the increase is not too strong,” he said.

Ortega said the version Recto “will at least protect the interests of tobacco farmers in the country.” “I do not advocate smoking,” he said. “I try to see its impact on tobacco farmers. The main crop of our farmers in the Ilocos region is tobacco. Pressing livelihood would be catastrophic. ” “The report submitted by Senator Recto’s Senate ways and means committee is more beneficial to health than was adopted by the House, or what was originally proposed by DOF, because the income goals in his bill are achievable and its proposed health programs are workable and sustainable” , she said.

Recto took into account all the relevant factors in the development of the bill, including the poor tobacco farmers and other small stakeholders, she said. Magsaysay said that 1,000% tax increase on the sins of the products that DOF had originally proposed to raise P60 billion was revealed as not a viable option based on consultation done with government tax experts. Recto’s bill if carefully studied, will show that it is a much better option than the version approved in the House, she added. At the Senate, Sen. Panfilo Lacson said the main changes to be expected after the requests for version Recto’s version of the Sin Tax Reform Bill are concluded.

Speaking over dzBB radio, Lacson said his version of the bill would tie the tax rate on the net retail price of the products, and not the current excise taxes imposed on them. “The rules of taxation are that it should be uniform and equitable,” he said. “There must be a fair and equal application of the law (under the Constitution). His version calls for a unitary tax rate for all products in January 2014 that the Recto version provides only in 2020 he added.

In a separate interview, Senate President Juan Ponce Enrile said the tax could not be used as a means to control everything, including the consumption of cigarettes and alcohol, because it is designed to generate revenue for the government. “If they want to kill the industry, do not do it through taxation,” he said. “Let’s just forbids it.”

Enrile said the government should consider the fact that by killing the two industries, not just going after the smokers and drinkers, but also the livelihoods of workers employed producers and their families who depend on them, tobacco farmers, and even ordinary workers who rely on the consumption of these products to give them relief from stress. The significant increase in the price of tobacco and alcohol is likely to lead to the spread of trafficking and production of counterfeit substitutes fill the supply gap in the market, he added.

It would be up to Malacañang, to convince allies in Congress to support his version of the bill before it is put to a vote in the Senate or the decision to the bicameral conference committee, Enrile said. Lacson said the present debate on the bill sin tax reminded him of past efforts to regulate the price of alcohol and tobacco during the previous administration, which he said was somewhat questionable.

A meeting between the leaders of Congress and Presidents ways and means committee of the Senate and House of Representatives was held in the home of former President Gloria Macapagal-Arroyo before the sin tax bill was put to a vote in Congress, he added. A problem arose when the representatives of the two largest tobacco companies Philip Morris, tobacco and Fortune tobacco - were also present, he said. Lacson said the final version of the bill that was approved then favored the two cigarette manufacturers.

“There was a protest from the other brands because it was not fair, they had to pay higher taxes,” he said. Lacson said that he wasn’t saying that Recto, who was also chairman of the ways and means committee on the previous adjustments to the sin tax were made, was favoring a particular group with his current recommendations on the bill. “I am not judging or suspecting Senator Recto, because it is an ally of the administration,” he said. “I’m not saying that he was speaking of the group. But since this is a collective effort and Senator Recto did not hold a hearing on his own.” Lawmakers should not lose sight of the goal of the bill to prevent smoking and alcohol consumption by raising taxes on tobacco and alcohol products, Lacson said.

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