The first cut is the deepest.
In both personal relations and public finance, the initial move defines the rest of the long term engagement.
All administrations take great effort in crafting their centerpiece budgetary program and financial plan.
This is because their six-year political “shelf life” would be framed by both the urgency and relevance of their budgetary and spending programs.
But the bottom line is this: either one is for raising taxes or cutting them to size.
The tricky part is keeping government expenditures within levels that can be sustained by available revenues and the balance covered by borrowings.
Of course, there is always a third way: and this is through better collection efficiency.
So what would it be for the Duterte Administration?
And since all budgetary measures must emanate from the House of Representatives, which wields the sole power of the purse, let’s check out the latest budgetary developments there:
The House Ways and Means Committee, chaired by Rep. Dakila Cua, is poised to pass what could be President Duterte’s first tax law.
The measure is not even included in package 1 of the tax=reform program submitted by Department of Finance to Congress.
The bill, authored by Party-list Rep. Eugene De Vera, would perpetuate the two-tier excise tax structure for tobacco products. This is apparently, an attempt to head-off the shift to a unitary of single rate tax beginning Jan. 1.
Ways and Means Committee held its first public hearing Nov. 28.
DoF, Department of Health, Bureau of Internal Revenue and the National Tax Research Center opposed the bill.
DoF – opposes a two-tier excise tax structure on cigarettes as it would supposedly encourage “downshifting”. On the other hand, a unitary structure is simple to administer; in fact, the farmers continue to benefit from earmarked funds under Republic Act No. 10351; and that the tax should be allowed to mature. However the DoF said they lauded the intention to increase excise tax rates in the proposal.
DoH – opposes the bill and echoed the DoF’s arguments; it argues “amendment is premature since full implementation of RA No. 10351 will start in 2017.”
It further asserted that displacement of farmers may be unfounded; citing extreme numbers (when it said that the poor would only stop smoking if the price of cigarettes is at P10.00/stick; on the other hand, the rich would stop smoking if price is P100.00/stick).
For its part, the NTRC – maintain that RA 10351; even rejected the 5% annual increase in the bill saying the RA 10351 is also health measure and not just for revenue generation.
The State Tax Think Tank noted five countries with single tier cigarette tax--- Malaysia, Thailand, Singapore, Cambodia, and Myanmar.
Meanwhile, the BIR opposes a two-tier structure, stressing that a unitary system improves tax administration.
Health advocates- The Action for Economic Reforms, the Action for Smoking and Health, and the Philippine College of Physicians, objected to the proposal citing public health gains.
Except for one holdout, cigarette manufacturers are vehemently opposed to this measure, Philip Morris Fortune Tobacco Corporation, Japan Tobacco, La Suerte all objected to the bill.
According to the technical working group of the committee, a report is being readied for the committee approval today.
Quite curiously, there was no media coverage of the first hearing on Nov. 28.
Why the rush? Why the secrecy?
Is there still time between now and Jan. 1.
Is the committee railroading passage?
Is there a powerful lobby?
Would this sit well with the Senate and President Duterte?
Behold God’s glory and seek His mercy.
Pause and pray people.