Sin tax bill awaits PNoy's signature

by RG Cruz, ABS-CBN News

Posted at Dec 11 2012 06:59 PM | Updated as of Dec 12 2012 07:17 PM

MANILA, Philippines - The controversial sin tax reform bill is just one signature shy of becoming a full-fledged law.

This, after both chambers of Congress ratified the committee report of the bicameral conference committee that reconciled the clashing versions of the bill from the Senate and House of Representatives.

Once signed into law by President Benigno Aquino, by January 1, 2013, the bill will impose taxes of P12 per pack for hand-packed cigarettes, and about P20 to P25 for machine-packed cigarettes.

Fermented liquor like beer could bear taxes worth P15 to P28, while a bottle of wine could be taxed anywhere between P30 to P700.

That's on the 1st year alone.

Tax rates for some "sin products" will be increased by certain perecentages in the succeeding years.

Bureau of Internal Revenue (BIR) Commissionner Kim Henares said these rates will not necessarily be passed on to consumers, noting that the concerned companies may subsidize the taxes  to avoid turning away buyers with high prices.

The law mandates the BIR to conduct a new price survey to determine the new suggested retail prices based on the new tax regime.

Nevertheless, cigarette vendor Jojo Roxas is already preparing to pass the burden to his buyers.

Roxas has been selling cigarettes outside a church in Quezon City for decades now, and he's been able to raise his kids with the meager revenues he makes.

He himself is a smoker, and he is concerned with how the higher taxes may turn off buyers.

"Halimbawa pag pumatak 8 pesos, gagawin ko sampung piso halaga ng stick. Sabi nila magiging sampung piso raw eh," he said. "Ewan ko ba sa gobyerno natin, 'di ko malaman ano gusto nila mangyari."

The sin tax reform law has been packaged as a health reform law that aims to discourage vices while generating revenue for government.

The government projects some P34 billion in revenue on its first year alone.

Part of the funding is meant to be used against smuggling.

But while 80% of incremental revenues have been earmarked for universal healthcare and for health programs, 2 lawmakers are wary that the remaining 20% may wind up as political largesse on the part of the executive.

That's in addition to the priority development assistance funds (PDAF) that lawmakers enjoy at the mercy of the Palace.

The bicameral conference committee report containing the reconciled sin tax bills of the Senate and House of representatives contains the following provision allocating part of the sin tax revenues to local and political subdivisions:

"Twenty percent (20%) shall be allocated nationwide, based on political and district subdivisions, for medical assistance and health enhancement facilities program, the annual requirements of which shall be determined by the Department of Health (DOH)."

Senator Ralph Recto said the bill doesn't specify which projects will be funded by the sin tax revenues, comparing it to a blank check handed to the health department - a view shared by Senator Panfilo Lacson.

"Parang ganun na rin iyon. Magiging pulitika yan, palakasan. Kung nakalagay sa batas eh di maliwanag," Recto said.

"Tama iyung kanyang observation. Yes," Lacson said.

The PDAF has been traditionally used by the executive as a carrot and stick to make sure lawmakers toe the Palace line on important legislative issues.

Those seen critical of the administration are given a hard time getting their PDAF, if not totally denied of their PDAF completely.