Anti-Reformers attempt to sabotage the administration’s sin tax bill

In a rushed, madcap meeting of the National Internal Revenue Subcommittee held at the House of Representatives on 30 January 2012, a consolidated version of the Sin Tax Bill was signed and approved by 10 members of the House, led by the Subcommittee’s chair Rep. Eric Singson Jr. of Ilocos Sur.

The ten signing Congresspersons including Rep. Singson, Rep. Mitos Magsaysay of Zambales and Rufus Rodriguez of Cagayan de Oro City want a bill that undermines the tobacco and alcohol tax reforms.

The consolidated Singson bill fuses the salient facets of the previous Mandanas and Singson proposals for excise tax reforms in alcohol and tobacco merchandise.

Sin tax reform advocates have criticized both the Mandanas and Singson bills for their weak and deceptive features. The consolidated  Singson bill  tax proposes a miniscule increase in tax rates across the same cumbersome multi-tiered classification system. Neither does it account for any future inflationary adjustments. The Singson consolidated bill merely resuscitates the tired features of the Mandanas and previous Singson bills.

To reiterate, the Singson bill lacks the essential features of adjusting tax rates to generate optimal revenues, indexing the sin taxes to inflation and simplifying the tax structure.  It does not contain either tax rate increases for distilled spirits.

In short, it defies the administration bill. The repackaged Singson bill will defeat the administration’s health and revenue objectives from being realized.

Also deplorable is the manner in which it was inked by the Singson group. In rushing its version of the sin tax bill, Rep. Singson called in the very late afternoon of January 26 for an early-morning meeting on the 30th. It should be noted that congressional offices were closed on January 27, followed by the weekend, preventing other legislators from acquiring prior information about the said meeting.  Tellingly, the Singson subcommittee did not even bother to invite the champions of the administration bill.

The Singson group’s consolidated bill is backward and anti-reform. It will contribute to worsening the Philippine fiscal problem.  It will exacerbate the health problems related to tobacco and alcohol consumption.

Contrary to the claim of Rep. Singson and company that the administration bill is anti-poor for taxing the poor who smoke and drink, it in fact protects the poor and the young.  Reducing alcohol and smoking consumption of the poor is good for their health and productivity. Increased revenues mean more spending for health, education and other essential services that will benefit the poor and their children. Improving the macroeconomy through increased tax effort encourages investor confidence that translates into jobs.

What we need are real sin tax reforms—as expressed in the administration bill filed by Rep. Joseph Emilio Abaya.

No less than Speaker Feliciano Belmonte, Jr. has made public his position for the passage of a sin tax that is simple—not the present multi-tiered rates and that is adjusted to inflation.  In a speech he delivered on 27 July 2011, he said: “It is high time that we restructure our tobacco and alcohol excise taxes. The prevailing multi-tax rate classification of cigarette and alcohol products and the pegging of sin taxes to 1996 price levels have convoluted the tax system and shrunk the tax base, dampening the government’s revenue efforts and essentially depriving the public of resources, which could have been used to fund the most basic of services.”

We are confident that the reformers will block the reactionary Singson bill. We are likewise confident that the reformers—whose integrity, reputation, and knoweldge of the issues are unassailable—will secure the passage of the sin tax reforms.

 

Filomeno S. Sta. Ana III

Coordinator

 

Jerik Cruz

Media Officer

 

For more information, call Action for Economic Reforms at  02 4265626.

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