‘No major hitch in sin tax, budget bicam’

MANILA, Philippines – President Benigno Aquino III may sign his two priority measures  – the sin tax reform bill and the budget – at the same time in December.

His ally, Sen Franklin Drilon, does not foresee any major obstacle as the Senate and the House of Representatives are set to reconcile their versions of the twin measures at the end of November.

At the Kapihan sa Senado press forum on Thursday, November 22, Drilon sought to downplay differences in the two chambers’ versions of the bills.

“There will be some discussion that is why I do not want to be overly optimistic. [We view this] with guarded optimism,” said Drilon.

“The budget, we have scheduled the signing by the President on December 20. The sin tax bill, we will try to have it at the same time.”

In a historic vote, the Senate passed the sin tax reform bill on Tuesday, November 20. A day later, Drilon sponsored the P2.006 trillion national budget for 2013.

Drilon is acting chairperson of the Senate Ways and Means Committee in charge of the sin tax bill, and the chairperson of the Senate Finance Committee overseeing the budget.

Enrile amendment issue in bicam

Drilon’s “guarded optimism” came after his counterpart for the sin tax bill in the house, Davao City Rep Isidro Ungab, said the Senate version was “workable.”

“That is a welcome statement so we have a good starting point,” said Drilon.

The Senate version of the bill aims to raise an additional P40 billion in revenues from tobacco and alcoholic products, higher than the P31 billion in the House version.

Drilon said he agreed with Ungab, reiterating that the challenge in the bicameral conference committee will be alcohol, not tobacco.

The Senate version aims to raise P23.55 billion from tobacco while the House set the revenues at P26.87 billion. Yet for alcohol, the Senate version’s target is P16 billion in revenues, much higher than the House figure of P5 billion.

“This is where the hard bargaining will be,” said Drilon.

The senator said another issue in the bicam will be the amendment introduced by Senate President Juan Ponce Enrile.

Enrile proposed to require local and foreign manufacturers and sellers of tobacco to source at least 15% of their raw materials locally. He said this was aimed at protecting local tobacco farmers, especially those from Northern Luzon. Enrile hails from Cagayan. 

Drilon has said this might violate the General Agreement on Tariffs and Trade.

“Should we require those who are importing to purchase the equivalent of 15% or 20% of the Virginia leaf locally? There are studies which indicate that this could be contrary to the WTO [World Trade Organization],” Drilon said.

Despite the challenges, Drilon echoed Bureau of Internal Revenue Commissioner Kim Henares in saying that the passage of the sin tax bill could be “the final hurdle” for the Philippines to get an investment grade credit rating.

“The passage of the sin tax law would impact positively on our credit rating which in turn will allow savings in our interest payments, which is based on a certain rate given how we are perceived by our credit standing,” Drilon said.

‘Not much difficulty in budget’

Drilon said there is also no major difference in the Senate and House versions of the 2013 budget. The budget is 10.5% higher than that of 2012.

“The amendments are not substantial. They are just minor and some realignments so it is not a problem,” said Drilon.

The bulk of the budget was allocated to social and economic services, he said. – Rappler.com