MANILA, Philippines – Speaker Feliciano Belmonte Jr. vowed to vigorously work for the passage of a reformed tax measure for cigarette and liquor that would increase government revenues without displacing tobacco farmers or reducing profits of the alcohol industry.
The Speaker issued the statement as the majority of the country’s governors reached a “broad consensus” to support the administration-endorsed House Bill 5727 or the “sin tax bill” pending in Congress. The bill seeks to restructure the excise tax on alcohol and tobacco products.
He said the month-long break would give lawmakers more time to consult with all stakeholders of the measures even as the World Trade Organization (WTO) is also relying on the government to enact a new excise tax law that would be compliant with the global body’s standards.
Aside from pressure from the WTO, the House of Representatives also has to contend with the tobacco farmers, who believe a restructured excise tax would flood the country with cheap imported cigarettes and kill local tobacco products, he said.
“Definitely we want to come out with a formula that does not impact as much on them (farmers). But we must remember also that one of the principal problems that we are facing here is the monopoly. The monopolistic hold of some companies on the industry – I think that’s an even bigger problem,” Belmonte told reporters.
“We will deal with these (many issues) and we would like to protect above all the health of Filipinos and tobacco farmers and we have to convince them that it’s quite beneficial,” he said.
He pointed out that tobacco-growing provinces would receive 15 percent of the revenues collected under the bill authored by Cavite Rep. Joseph Emilio Abaya or higher than the current system.
The bill also would have a clear provision on earmarking the bulk of proceeds for the payment of premiums for the Philippine Health Insurance Corp. to ensure the viability of the universal health insurance program for Filipinos, Belmonte said.
The Malacañang-backed measure would raise at least P30 billion annually for the government, proponents said. It calls for the adoption of a unitary rate instead of the current four-tier system, with future rate adjustments indexed to inflation. The bill calls for a reclassification of existing brands based on current retail prices.
Abaya earlier admitted that a compromise measure would have to be hammered out as lawmakers from northern Luzon – where most tobacco farms are located – and the Nationalist People’s Coalition (NPC) are strongly opposing his bill.
The NPC is identified with billionaire businessman Eduardo Cojuangco Jr., big boss of San Miguel Corp., which, together with rival Asia Brewery, has expressed opposition to the measure.
The two beer brewers said the measure would impose a P30 tax on the first year of implementation of the proposed sin tax reform law and thus would hit the low-price beer market, which is about 74 percent of the entire beer market.
Governors support bill
League of Provinces of the Philippines president and Oriental Mindoro Gov. Alfonso Umali said the governors support the bill because “it will generate revenues to finance public-private partnership projects, reduce smoking-related expenditures on health services, and save the country’s young and poor from lifestyle diseases.”
“We believe that now is the time for us to cross party lines and support this bill. The benefits to our people that would result from this law would affect an entire generation of Filipinos,” he said in a statement.
Umali concurrently heads the Union of Local Authorities of the Philippines (ULAP), the umbrella organization of the leagues of governors, city mayors, municipal mayors and barangay and other local officials.
The consensus was arrived at during a recent meeting in Manila of the LPP’s executive board.
Umali also reiterated an earlier consensus among governors of tobacco-producing provinces to win the support of congressmen.
One of the bill’s most vocal supporters, Gov. Luis “Chavit” Singson of Ilocos Sur, which is a leading tobacco-producing province, had earlier said HB 5727 would level the playing field by destroying monopolistic pricing and allowing the entry of more producers.
Singson, the LPP national chairman, said the proposed law would benefit farmers in the long run, allowing them to modernize decades-old tobacco curing system still practiced in most areas. He said only manufacturers prospered under the old system at the expense of farmers.
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By: Paolo Romero
Source: The Philippine Star, March 24, 2012
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