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“SIN” TAX REFORMS will be prioritized by the government in the effort to raise needed revenues, with officials saying the move does not go against a presidential campaign pledge.
“The Cabinet approved the measure indexing ‘sin’ taxes to inflation for inclusion in the [list of] priority legislation,” Budget Secretary Florencio B. Abad told BusinessWorld on Friday.
Palace officials last week said “sin” taxes — described as such as they are levied on tobacco and alcohol products — would be included in new priority list that the Legislative Executive Development Advisory Council (LEDAC) will discuss tomorrow.
Finance Assistant Secretary Ma. Teresa S. Habitan yesterday said her department had recommended the adoption of the tax reform because it would “improve the buoyancy of tax collections.”
Currently, excise taxes imposed on alcohol and tobacco products are computed based on net retail prices as of 1996. Revenue officials have long wanted this changed, noting that base prices have since more than doubled.
“The ‘sin’ tax rates have not moved with our growth,” Ms. Habitan pointed out.
Previous attempts to push the reform in Congress have failed, with observers pointing to successful industry lobbying. Fresh proposals have again been filed and the Cabinet’s support for the reform, Mr. Abad claimed, does not mean that President Benigno S. C. Aquino III was setting aside last year’s campaign promise not to impose new taxes.
“That is not the case,” he said in a briefing for BusinessWorld, pointing out that what will be done involves tweaking an existing tax.
The no new tax policy has been criticized by analysts who have stressed the need to raise revenues to support priority government projects such as conditional cash transfers and infrastructure.
The need for structural revenue reforms have also been highlighted by credit rating agencies, which noted that the Philippines’ revenues amounted to only 14% of gross domestic product last year, lagging behind the 26% of similarly rated economies.
One of the two “sin” tax measures pending in the House of Representatives has been filed by Mr. Abad’s wife, Batanes Rep. Henedina R. Abad. The other was filed by Rep. Niel C. Tupas, Jr. (5th district, Iloilo).
Approval of the reform could bring in P58.54 billion in revenues next year, rising to P72.43 billion in 2013 and P65.55 billion in 2014, according to data from the House ways and means committee.
To push the reform’s appeal, a portion of the revenues will be earmarked to fund public health programs.
The final list of priorities to be submitted to the LEDAC, meanwhile, is expected to be finalized today, Malacañang officials yesterday said.
“The Office of the Executive Secretary is working overtime so as to accommodate the refinements that were requested, the additional details and the revisions that were agreed upon during the Cabinet meeting [last Friday],” Deputy Presidential Spokesperson Abigail D. Valte said in a radio interview.
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By: Diane Claire J . Jiao with Noemi M. Gonzales and Johanna Paola D. Poblete
Source: Business World, Aug. 14, 2011
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