Lawmaker warns vs rushing sin tax bill

Efforts at the House of Representatives to rush processes for the passage of a sin tax bill may result in a half-baked measure, a lawmaker has warned. Batanes Rep. Henedina Abad cautioned Batangas Rep. Hermilando Mandanas against rushing efforts to increase revenues from tobacco and alcohol taxes. “There is no need to rush the process." Haste may result in a tax measure that is half-baked, she warned in a news release. But still, Abad said she supports Mandanas' efforts to help improve existing tobacco tax measures and simplify their administration to raise enough revenues to meet the government’s targets, prevent a fiscal crisis, and ensure sustainable growth for the country. Mandanas, who chairs the House Ways and Means Committee, had vowed to ensure a sin tax bill will come out of his committee before Congress adjourns in June. Such a bill will be deliberated on the House floor when Congress resumes in July. Abad said Mandanas' bill should be a consolidated version of all seven proposed sin tax bills now pending in his committee, “including mine." She noted there are now seven tobacco bills being deliberated by the House Ways and Means Committee. Abad is the proponent of one of the seven sin tax House bills (HB 3465), “An Act Restructuring the Excise Tax on Tobacco Products and Amending for the Purpose the Pertinent Sections of the National Internal Revenue Code, As Amended." On the other hand, she said portions of Mandanas' House Bill 3059 may “(fall) short of the economic reforms of the Aquino administration, which have been promising so far." The Mandanas measure, entitled “An Act to Promote Equitable Sharing of Costs and Benefits in the Alcohol and Tobacco Industry, Amending for the Purpose Sections 141, 142, 143 and 145 of the National Internal Revenue Code of 1997, As Amended," will remove the price classification freeze and update the 1996 matrix of prices, which serves as the basis for computing taxes on alcohol and cigarettes. Abad said that this was “very good – but not enough." “Yes, we support the government’s efforts to reform the tax law and simplify its administration," she said. “Moreover, increasing excise taxes – particularly on tobacco products – will bolster the government’s revenue efforts, even as it helps protect our human resources by preventing the deaths of thousands of Filipino youth who might die of smoking-related cancers if they began or continued to smoke," she added. As of posting time, GMA News could not contact Representative Mandanas for his comments. Over the last 10 years, several governments around the world have found that increasing tobacco taxes prove to be an effective means of discouraging smokers or preventing youth from starting the addictive habit – apart from being an effective way to raise government revenues. “However, we need to thoroughly mend the weak National Internal Revenue Code by correcting three main flaws in the country’s current tobacco tax system, which have so far rendered the tobacco tax ineffective in both reducing tobacco consumption and improving tax efforts," Abad said. “The three changes needed are the removal of the price classification freeze, a shift from the multi-tiered to the unitary tax system, and the indexation of specific taxes to inflation or even to nominal GDP," she said. According to her, without indexation, the price increases of cigarettes and tobacco products will eventually outpace tobacco tax increases – and any tobacco tax law passed will have to be reviewed and amended again after a number of years. “Why not make one complete and thorough overhaul now instead of a piecemeal reform?" she said. “My bill, HB 3465, includes all three key measures." Unlike the proposed measure of Rep. Mandanas, it does not increase taxes on beer and other alcohol products, she said. Apart from House Bill 3059 (Mandanas proposal) and House Bill 3465 (Abad), five other sin tax measures are being deliberated. These are House Bill 2687 filed by Reps. Jocelyn Limkaichong, George Arnaiz and Pryde Henry Teves; House Bills 2484 and 2485 filed by Rep. Erico B. Aumentado; House Bill 3183 filed by Rep. Danilo Suarez; House Bill 3487 filed by Rep. Neil Tupas and House Bill 3666 filed by Rep. Paolo S. Javier. — LBG, GMA News