Press Release – Action for Economic Reforms – 11 October 2012

Civil society and sin tax reform advocates called on the Senate to rectify the “Recto-fied” and “watered down” sin tax bill sponsored by Senator Ralph Recto.

Filomeno Sta. Ana of the Action for Economic Reforms (AER) said even the Palace said it was not happy with Recto’s bill. Finance Secretary Cesar Purisima was quoted as saying revenues to be generated under Recto’s version would “fall short of what we need.” Health Secretary

Enrique Ona had also said he was “disappointed” with Recto’s bill.

AER also pointed out that Senator Pia Cayetano had already expressed in her Twitter account her dismay with Recto’s version, saying it was “watered down” and that she could not accept it. She promised to fight for a better version of the sin tax bill.

Senator Franklin Drilon had also said he would introduce amendments to the bill once it reaches the floor.

According to Sta. Ana, the sin tax bill crafted by Recto favored tobacco companies and ignored public health concerns. “It shows he is defying President Aquino who considered this as a priority bill.”

“If passed, the bill will be rejected by civil society. The Senate must work to rectify this bill,” he said.

Sta. Ana also said future investment upgrades of the Philippine economy hinge on the passage of genuine reform bills. “We have seen how Recto can betray the public trust and he can do that in relation to tax reforms which are forthcoming. How can we expect Recto to adhere to the administration reform agenda when in this crucial matter, he defied the administration?”

Sta. Ana also branded Recto’s proposal to allocate 50 percent or around P30 billion of the total proceeds from tobacco and alcohol as “deceptive.”

“The 50 percent allocation is based on the total tax collection. What matters is additional revenue, not the total. What Recto proposes is deceptive,” Sta. Ana said.

He added that Recto’s bill was a virtual carbon copy of recommendation submitted by tobacco giant Philip Morris.

Sta. Ana explained that advocates had suggested a unitary tax system that would be simpler to administer and would slap the same tax for cheap and expensive brands. But Recto’s bill seeks to implement a three-tier system that would actually net a total of just P15 billion a year in revenues.