Congress bicam OKs sin tax bill, sets ratification on Tuesday

10 December 2012

(Updated 3:57 p.m.) Representatives from the two houses of Congress on Monday reconciled conflicting provisions in the proposed measure seeking to increase the excise tax on tobacco and alcohol products, particularly in the allocation of revenues from the expected additional income. In an interview with reporters, Sen. Franklin Drilon, the bill's sponsor, said the committee report will be signed and submitted for ratification to the Senate and House of Representatives on Tuesday. "We finished. After meeting for four hours we were able to reconcile all of the disagreeing provisions between the House and the Senate and tomorrow we will sign formally the bicameral conference committee report," he said. "This is a breakthrough, this is a reform measure that this President has pushed for and which we will have after he signs the bill into law," he added. Drilon said congress expects President Benigno Aquino III, who has expressed strong support for the legislation, to signed it into law before Christmas. The senator said the provisions reconciled by the committee on its last sin tax bicameral conference meeting earlier in the day focused on the earmarking provisions. "We have agreed that after deducting the allocations under Republic Act 7171 and Republic Act 8240, 80 percent of the remaining balance of the incremental revenue shall be allocated for universal healthcare under the National Health Insurance Program, the attainment of the Millenium Development Goals and health awareness campaign. Twenty percent 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," he said. RA 8240 is the National Internal Revenue Code, while RA 7171 promotes the development of the farmers in Virginia Tobacco-producing provinces. Drilon said the panel's members agreed on the reallocation after several members of the House of Representatives objected to Sen. Ralph Recto's proposed provisions for specific allocations for local hospitals. "The needs [of localities] are not the same so the provision was [made] more general," he said. Revenue burden sharing Last week, the committee agreed on the share of target revenues from the tobacco and alcohol industries. Drilon said the burden sharing between tobacco and alcohol will be 69-31 in 2013, instead of 60-40 as proposed by the Senate and 87-31 by the House of Representatives. "It was a give-and-take in the bicam committee conference and we came up with a compromise of approximately 69-31 percent," he said. He said the total excise tax collection for 2013 is expected at P33.96 billion, P42.82 billion in 2014, P50.63 billion in 2015, P56.86 billion in 2016, and P64.18 billion in 2017, or a total of P248.49 billion in five years. Drilon added that the total target revenue for tobacco is P23.4 billion for 2013; P29.56 billion for 2014; P33.52 billion for 2015; P37.09 billion for 2016; and P40.9 billion for 2017, for a total of P164.47 billion. For fermented liquors or beer, Drilon said it’s P4.5 billion for 2013, P6.99 billion for 2014, P9.52 billion for 2015, P12.06 billion for 2016, and P15.646 billion for 2017, or a total of P48.53 billion. For distilled spirits, it will be P6.06 billion for 2013, P6.31 billion for 2014, P7.59 billion for 2015, P7.71 billion for 2016, and P7.82 billion for 2017, or a total of P35.34 billion. Raw materials Drilon said they have also agreed to keep the provision proposed by Senate President Juan Ponce Enrile for tobacco manufacturers to source a portion of its raw materials locally. But he said the provision was amended to state: "Of the total volume of cigarettes sold in the country, any manufacturer and or seller of tobacco products must source at least 15 percent of its tobacco leaf raw materials supply locally subject to adjustment based on international treaty commitments." The amendment will ensure that the sin tax bill is compliant with the General Agreement on Tariffs and Trade (GATT) and World Trade Organization (WTO), Drilon said. "We believe that will stand scrutiny," he said. — KBK/YA, GMA News