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Anti-poor tax measure

  • Written by Dennis F. Fetalino
  • Published in Opinion
  • Read: 170

There is a problem on the horizon---there is no horizon. It is not a problem if you don’t look
up.     –– Rogue One

A big, bitter fiscal blow to a social sweet spot.

Why is it that when government sets grand goals, the little people or the marginalized sector
always take the biggest, most painful hit?

Isn’t taxation supposed to be progressive? That is, it should be based on the ability to pay
of the one being taxed.
    
But a proposal under serious and final consideration in Congress is feared to decimate the
smallest of the small but thriving businesses which also cater to their own kind.
    
Worse, the item being targeted for higher taxation is the main source of  a person’s daily
dose of hydration and energy.
    
Calling this socially unjust is a grave understatement.
    
Indeed, The campaign promise of  President  Duterte of a tax system overhaul is soon to be
fulfilled but is it how we all hoped for and pictured it to be?
    
Ped Xing just had to ask because a month or so before the first package of the
administration's Comprehensive Tax Reform Program (CTRP) is expected to be signed into law, the
opposition against what some has described as a very "anti-poor" bill is still piling up.  
    
Part of the ambitious CTRP, the Tax Reform for Acceleration and Inclusion Act (TRAIN) bill or
House Bill 5636 provides for lower personal income taxes while levying excise taxes on fuel, new cars,
and sugar-sweetened beverages (SSB), which include soft drinks and powdered juices.
    
In August, the House of Representatives green lighted to House Bill 5636. The House bill’s
equivalent, Senate Bill 1408, is now under deliberation, and the word on the street is that it may be
passed soon.
    
In what could be the biggest move to oppose the proposed law, some 300,000 signatures were
just recently forged and gathered from petitioners composed of low-income patrons and small sari-sari
stores and carinderia owners across the country.
    
Basically, they raised their disapproval of the bill as this will "drastically affect their
daily expenses and income".
    
Philippine Association of Stores and Carinderia Owners (PASCO), the group which led the
petition, said while their members understand and support the government’s need to raise money for its
various social and infrastructure programs to help improve the lives of the people and sustain the
country’s economic growth, this bill is "anti-poor and would make small micro-retailers, consumers,
sugar and coffee farmers, and manufacturing plant workers carry the burden".
    
Based on PASCO's estimates, 80 percent of  consumers that would be affected by prices
increases on SSBs are also low-income earners.

300,000 is also not a number to be ignored. After all, it was gathered through a face-to-face
encounter with people who think they will be directly affected by the proposed changes, which could
also hit other industries where it hurts the most— which is supply and demand.
For instance, a lower demand for raw sugar on the weight of a possible slowdown in consumer
goods production could also hurt the employees of food and beverage manufacturers and ultimately, the
sugar farmers.
    
This concern, among other things related to the issue, has fortunately reached the Senate.
Senator Sonny Angara, who currently chairs the Senate Ways and Means Committee, which is deliberating
the measure, apparently thinks there is a need for a "fairer and more reasonable” excise tax on SSB,
or probably anything less than the severe rate that ranges from an additional P10 per liter for SSB
containing locally produced sugar and up to P20 per liter for the rest.
    
The P10, according to him, was too high and could even push retail prices by as high as 50
percent.
    
Through the proposed measure, the government is now boasting of the fact that it could earn as
much as P47 billion in additional revenues. This, while also calling it a "health measure" because
people will be forced to reduce their consumption of sweetened beverages and could eventually avoid
obesity or diabetes.
    
But you know what represents more than tenfold of what the government coffers stand to gain in
the proposed bill? Smuggled goods comprised of sugar, cigarettes, and petroleum products with a
combined worth of nearly a trillion pesos.
    
A study produced by the University of Asia and the Pacific showed that illicit traders in only
eight industries were able to smuggle at least P904.6 billion worth of goods into the country in the
span of five years.
    
In the same period, the economic impact of illicit trade on the country’s Gross Domestic
Product is likewise estimated at about P495.5 billion.
    
If the government could only reduce, if not eliminate, this illegal trade, it would have
translated into better earnings for the country and sugar industry for that matter.
    
A scheme proposed by Senator JV Ejercito also seems to be less taxing to ordinary consumers.
    
In his proposal, Ejercito only wants to impose a tax of three centavos per gram of sugar on
sweetened beverages using purely caloric sweeteners and exemption for beverages that use purely
coconut sap sugar; a tax of five centavos per gram of sugar on sweetened beverages using purely high
fructose corn syrup or in combination with any caloric or non-caloric sweetener; and a tax of one
centavos per gram of sugar on sweetened beverages using purely non-caloric sweeteners or a mix of
caloric and non-caloric sweeteners and exemption for beverages using purely steviol glycosides.
    
Some said this is way better than the government's provisions for SSBs for it captures the
very social justice agenda that made Duterte, who promises a radical change that would be beneficial
for the common tao, won in the first place.