SOMETHING is fishy with the way the House Ways and Means Committee is behaving. It is rushing the passage of what could be the very first tax measure under the Duterte government.
Very recently, the committee chaired by Rep. Dakila Cua unanimously approved a bill that would perpetuate the current two-tier excise tax system. The body junked the planned single rate system the previous administration fought hard to put in place beginning January 1, 2017.
In a blitzkrieg fashion, the committee, after just two public hearings and despite objections from various executive agencies, tobacco farmers and cigarette manufacturers, passed without amendment the bill filed by Party-list Rep. Eugene de Vera.
All revenue measures, as mandated by the constitution, should emanate from the House of Representatives. This is the exclusive domain of the people’s representatives based on the principle that there is no taxation without representation.
Away from the glare of any media scrutiny, the committee conducted its first public hearing on this bill last Nov. 28 and the following week Dec. 5 passed the measure with an instruction to its secretariat to submit the committee report “as soon as possible” for plenary action.
The bill sets the excise tax for low price cigarettes at P32 per pack from the current rate of P25 and the high price ones at P36 per pack from P29. The current law prescribes as unitary tax of P30 per pack beginning Jan. 1, 2017, or roughly three weeks from now.
There were none of the protracted debates that marked the previous sin tax law. There were no figures given on how much incremental revenues would be generated, impact on sales volumes based on price elasticity and consequences of the worsening illicit cigarette trade.
Curiously, the bill was not even included in the priority tax measures submitted by the Department of Finance to Congress as part of the so-called package 1 of the tax reform program of the Duterte administration.
What raises eyebrows even more is that all the concerned agencies objected to the proposal led by the Department of Finance, the Department of Health, the Bureau of Internal Revenue and the National Tax Research Center.
In the first public hearing, all cigarette manufacturers including Philip Morris Fortune Tobacco Corporation (PMFTC), Japan Tobacco International, British American Tobacco and La Suerte Cigar opposed this bill -- save for one other major player. Only Mighty Corporation, the dominant player in the low price segment, expressed unqualified support for the de Vera bill.
Health advocates also expressed strong objections pointing to the public health benefits of a single rate for tobacco products.
With the overwhelming opposition and the apparent haste of the Ways and Means committee, this is beginning to smell like a midnight decree to be passed by the new railroad majority... este… the new super majority of President Duterte in the House.
The locomotive engine is apparently being fueled by a mighty strong lobby. It doesn’t take a rocket scientist to see the obvious. The only group that stands to benefit from this midnight decree is the one lording it over the low priced cigarette segment, those selling cheap cigarettes at P2 per stick.
The proponents are arguing that the measure is for the benefit of the poor tobacco farmers. But why then is the Philippine Tobacco Growers Association, the largest farmers group in the country, opposing the bill?
PTGA President Saturnino Distor has issued a statement saying the farmers are still struggling to regain lost volume from the huge increase in 2013 and another 20 percent increase, as what the bill is proposing, would deal the killer blow to the industry. This corner wonders how the Senate and President Duterte would react once Speaker Pantaleon Alvarez transmits the approved bill from the House.
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