By Butch Fernandez & Bernadette D. Nicolas, May 29 2019; Business Mirror

Image Credit to Business Mirror

SENATORS see a tough task ahead in passing the final reconciled version of a controversial revenue measure increasing the excise tax on tobacco products, even if its passage was certified urgent by Malacañang on Tuesday.

Still, Senate Majority Leader Juan Miguel Zubiri told reporters they are aiming for a plenary vote on the Palace-endorsed “sin” tax bill early next week, as Congress is set to adjourn anew, going on recess from June 8 to July 21.

Madugo pa [It’s still bloody],” Zubiri said of the deliberations on the tax bill, adding, “but we need to pass it by Monday.”

Being a certified bill, “we can proceed to vote direct on second and third reading” in one sitting, he pointed out.

This, even as Finance Secretary Carlos Dominguez III aired optimism that the bill will hurdle the vote, citing signals from  House leaders they were open to adopting the Senate version of the revenue measure that imposes a P60 tobacco excise tax.

Adoption of the Senate version by the House will avert lengthy bicameral talks to hammer out a reconciled final version soon.

Camarines Sur Rep. Luis Raymund “LRay” Villafuerte on Tuesday said he is ready to support the Senate’s proposed staggered rate hike for the pending amendment of the Sin tax law.

In a statement, Villafuerte said Sen. Juan Edgardo Angara’s rate proposal is “acceptable” even if a big departure from the rate being pushed by the Department of Finance (DOF) and Department of Health (DOH).

“The current Senate formula of a staggered increase of P45 for the first year with incremental increases of P5 until it reaches the P60 level is still acceptable,” Villafuerte said.

DOH and DOF want a P60-per-pack increase in the excise tax for cigarettes, to be increased by 9 percent each year thereafter.

What is important, however, is for the tax reform to pass the bicameral conference and be signed by President Duterte before the 17th Congress adjourns, Villafuerte said.

Meanwhile, Dominguez suggested that senators consider adopting the House version of the sin tax on alcoholic drinks, noting that “the bill was already passed in the House, so all they [senators] have to do is adopt the House version—just like the House is considering adopting the Senate version for the tobacco.”

Certified urgent

Days before the 17th Congress officially adjourns to make way for a new set of lawmakers, President Duterte on Tuesday certified as urgent the Senate bill seeking to raise cigarette excise tax.

According to Presidential Legislative Liaison Office Undersecretary Ryan Estevez, the President signed the document only on Thursday afternoon.

In a phone call with the BusinessMirror, Estevez said Senate Bill 2233 was the only one certified urgent by the President since the House of Representatives has already passed its version on third and final reading.

With the urgent certification, a bill need not undergo the three-day rule between the second and third reading, with approval on both levels done within the same day.

On Monday, senators firmed up an emerging consensus to raise cigarette excise tax on top of stiffer penalties against illicit traders, formally endorsing the measure for plenary consideration and approval.

Angara, panel chairman, confirmed that the majority of the 15-member endorsed Committee Report 714 raising the excise tax by as much as P45 in 2020 to P60 per pack in 2023 and mandating a 5-percent yearly hike starting January 1, 2024.

As approved by the panel, the committee report, which also endorsed the early approval of Senate Bill 2233—coauthored by Angara and Sens. Sherwin Gatchalian, Joseph Victor Ejercito and Emmanuel Pacquiao—provides the following scheduled tobacco tax increases: P45 per pack increase effective January 1, 2020, until December 31, 2021, P50 in January 2021, P55 per pack in January 2022 and P60 per pack effective January 1, 2023.

The 17th Congress is set to hold sessions until June 5 before it officially adjourns on June 6.

Sin tax for health care

Dominguez, batting for its early approval, asserted that the government needs to raise an additional P400-billion revenue to bankroll implementation of the Universal Health Care (UHC) law.

He noted that the UHC program’s expected expenditure for the next five years is P1.4 trillion. “The amount we have right now is only P1 trillion, so we’re going to be short by roughly P400 billion…I am sure that is not the intention of the President or the legislature; they want the full coverage,” Dominguez added.

Revenue shortcut assailed

The tobacco makers, farmers and vendor groups have in recent days assailed the DOF’s—and the Department of Health’s—aggressive push for passage of the excise tax hike bill, saying the government tack in “overtaxing” just one sector is a shortcut that will not fully solve the problem and only spawn new ones.

For one, an association of sari-sari store owners told a Senate hearing that the higher retail prices of cigarettes as a result of the implementation of the TRAIN law in 2018 did not deter people from smoking per se. They simply stopped buying from legitimate vendors and turned to peddlers of counterfeit cigarettes using popular brand names, or smuggled items.