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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.

Position Paper on the Rationalization of Fiscal Incentives

As part of AER’s tax policy, we are supporting legislation that aims to phase out redundant tax incentives that cost billions of pesos in lost revenues and to put in place a well-targeted and a performance-based fiscal incentives system. While fiscal incentives, in their current design, administration, and context, may have proven to be of little value when it comes to encouraging investments, the notion of providing effective subsidies to worthy investors should not altogether be abandoned.

An Appeal to Representative Mandanas

As the 15th Philippine Congress resumes its regular session on 14 November 2011, we look forward to seeing the Lower House immediately tackle the passage of a bill that will reform tobacco and alcohol taxes. After all, no less than the President, with the concurrence of the House Speaker, has pronounced the bill on sin taxes— we prefer to call them health-oriented taxes— as a priority legislative measure.

In fact, the Legislative Executive Development Advisory Council (LEDAC) has endorsed a bill that contains the best features found in the bills filed by several House representatives, namely Henedina Abad, George Arnaiz, Jocelyn Limkaichong, Pryde Henry Teves, and Niel Tupas, Jr.

Abad: Indexation of Sin Taxes Still an Aquino Priority Measure; P33-billion Projected Revenue for Indigent Healthcare Insurance

“The Aquino administration continues to support the indexation of sin taxes on tobacco and alcohol to inflation as a key reform measure. It is expected to generate about P60 billion, of which about P33 billion that we can use for social services for the poor, particularly universal healthcare for the second quintile of poor households,” he said, noting that the first quintile is already being fully assisted starting with the 2012 National Budget.

The Deeper Implication of Taxing the PEACe Bonds

Strange that the story about the decision of the Bureau of Internal Revenue (BIR) to apply the 20 percent withholding tax on the celebrated or notorious (depending on which side you are on) PEACe Bonds did not merit space in the major dailies.

The major dailies like the Philippine Daily Inquirer and the Philippine Star did not run the story though it is an explosive one. The PEACe Bonds controversy, which happened in 2001, continues to hound its main characters till today. During the resistance to Gloria Macapagal-Arroyo, sections of the opposition cited the PEACe Bonds as one of the blatant cases of corruption during her long term.

Higher Sin Tax: Bigger Revenues, Less Consumption

All told, the total cumulative revenues to be generated from the sin tax reform will amount to more than PHP530 billion pesos in six years (2012-16). For the first year alone, the revenues to be collected will reach PHP 60.63 billion pesos, half of the amount to be contributed by the tobacco taxes.

Furthermore, health objectives will be satisfied. We can expect a reduction of approximately two percentage points in smoking prevalence, and we can generate substantial funds to finance the government’s program for universal health coverage.