Liquor makers to Congress: Suspend action on excise taxes

ABS-CBN News

Posted at Jul 27 2011 04:39 PM | Updated as of Jul 28 2011 12:39 AM

Manila, Philippines - The country's taipans and distillery owners have asked Congress to suspend deliberations on measures seeking to hike excise taxes while the government appeals a World Trade Organization (WTO) ruling declaring local taxes on distilled spirits as unfair.

In separate letters to House Speaker Feliciano Belmonte Jr. and ways and means committee chairman Hermilando Mandanas, members of the Distilled Spirits Association of the Philippines (DSAP) said the government's chances of winning a favorable decision from WTO would be "imperiled" if Congress continues to deliberate and comment on the country's excise tax system.

The letters were signed by Ramon Ang of San Miguel Corp., Lucio Tan of Tanduay Distillers Inc., Andrew Tan of Emperador Distillers Inc., and Olivia Limpe-Aw of Destileria Limtuaco. The four represent the country's biggest distillers and alcohol producers.

In Congress, several bills proposing to increase exise taxes on local alcohol products are pending. The bills cite that current rates under the National Internal Revenue Code are still based on the net retail price of distilled spirits as of 1996.

WTO's dispute settlement body had declared in a report in June that the Philippine excise tax system was discriminatory as it was imposing higher taxes on imported distilled spirits. The WTO ruled based on the complaints raised by the European Union and the United States.

DSAP members, however, argued that even without taxes, imported brands are priced much higher than domestic brands.

They warned of the adverse effects of the WTO ruling on local manufacturers and the economy, in general.

"Over a million families depend on our industry which includes alcohol distillery workers, bottling factory workers, sales people, merchandisers, delivery personnel and upstream industries like the sugar industry, which alone employs directly half a million people and indirectly about five million workers," the group said.

Because of this, it added it is important that Congress defers all actions on excise taxes "until such time that the WTO Appellate body shall have ruled with finality on the matter."

Last year, DSAP members produced some 66 million cases of distilled spirits with gross sales of close to P50 billion.