By Charmaine A. Tadalan, August 22 2019; Business World
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THE SENATE Ways and Means committee expects to approve the measure increasing excise tax on alcohol products in two to three weeks, its chairman Senator Pia S. Cayetano said.
Ms. Cayetano cited difficulty in approving remaining tax reforms any time soon since the chamber is set to begin parallel hearings on the P4.1-trillion national budget for 2020 in order to ensure it is signed into law by yearend.
“In terms of the pace of the committee, ang goal is to have hearings every week. I just want to be sure that all the stakeholders will be heard on record,” Ms. Cayetano said in a media forum in Manila on Wednesday.
“Next week, I plan to continue alcohol and then go to the e-cigarettes and vapes issue, siguro mga two to three hearings pa ‘yun.”
Its counterpart measure, House Bill No. 1026, principally authored by Albay 2nd District Rep. Jose Ma. Clemente S. Salceda, bagged final approval in the House of Representatives on Tuesday.
Asked whether the excise tax increase for alcohol products can hurdle both chambers by yearend, Ms. Cayetano said “medyo mahirap ‘yun (that will be difficult) only because we have the budget.”
“But kung sasabihin mo lang naman na (if you focus only on) alcohol products, eh di tapos na ako(my committee can approve that) in two weeks, tapos magko-committee report ako,” she said, noting that she also serves as vice-chairman of the finance committee that is in charge of budget hearings.
The Department of Budget and Management transmitted the proposed 2020 National Expenditure Program to both chambers on Tuesday. The House is set to hold its first budget hearing on Thursday, beginning with a briefing by the Development Budget Coordination Committee.
The alcohol and e-cigarette excise tax increase was among the bills mentioned by President Rodrigo R. Duterte in his July 22 fourth State of the Nation Address, along with the proposal to cut the corporate income tax to 20% by 2029 from 30% currently, centralize real property valuation and assessment, and simplify the tax structure for financial investment instruments.
Ms. Cayetano on Tuesday led the initial deliberation of Senate Bill No. 383, filed by Senator Emmanuel D. Pacquiao, which adopted the proposal of the Department of Finance and the Department of Health.
The Senate bill proposed to increase the ad valorem tax rate to 25% of the net retail price of distilled spirits from the current 20% and the specific tax rate to P40 per proof liter from 24.33 in 2020. The specific tax rate will increase by P5 annually until it reaches P55 in 2023 and will increase by 10% every year thereafter.
The proposal is expected to generate P33.3 billion in revenues in the first year of implementation, double the P16.6 billion incremental revenue from alcohol products expected under the House version.
“If you ask me — am I inclined to support the position of DoF? Well, I came from the committee on health before and I’m always at the front line receiving the concerns and complaints of our kababayan, who need more health care and I see it myself; so of course, I want to raise more funds for it.”
The House bill will increase the ad valorem tax on distilled spirits to 22% of the net retail price per proof and a specific tax of P35 per liter. The specific tax rate will then increase by P5 every year until it reaches P45 in 2022, after which it will increase by seven percent annually beginning 2023.
The government has so far enacted Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Law, which slashed personal income tax and increased or added levies on several goods and services; RA 11213, the Tax Amnesty Act, which grants estate tax amnesty and amnesty on delinquent accounts left unpaid even after being given final assessment; and RA 11346, which will gradually increase excise tax on tobacco products to P60 per pack by 2023 from the current P35. — Charmaine A. Tadalan