Read P-Noy’s lips: No new taxes

Disrupted by the whirlwind of official activities and events from the just concluded Asia-Pacific Economic Cooperation (APEC) Leaders’ summit, we’ve immediately hit the road literally to resume our normal way of life here in Metro Manila. Establishments located along the “locked down” roads – secured during APEC week – that were forced to temporarily close are now back in business.

Government drumbeaters-cum-apologists kept saying we, Filipinos, will ultimately reap the benefits of sacrifices made to ensure the success of our country’s hosting this year’s APEC summit. They admitted though that this will bear fruit not now but would be felt in the long run.

Dubbed as the “bosses” of President Benigno “Noy” Aquino III, the Filipino people aren’t too happy with such official assuages while also telling us at the same time the APEC summit is a “non-binding” meeting held every year among these leaders.

Leaders of the 16th Congress have vowed to scrutinize the details of the P10-billion expenses by the government for the holding of the APEC summit. But that would be an exercise in futility. What needs to be looked into is how to mitigate such extreme measures of paralyzing our people’s way of life and conduct of business like we suffered from last week’s APEC summit.

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During the weeklong APEC events here, President Aquino had the opportunity to speak and deliver at least ten speeches before international and local audiences. In his speech in one of the APEC fora, President Aquino sought to highlight his administration’s good governance reforms since assuming office more than five years ago.

P-Noy credited good governance as good economics that has been sustaining the growth of the Philippine economy. “Might I emphasize that we did all this, and more, without raising any taxes, apart from the sin tax,” President Aquino said.

Of course, the President was referring to the Sin Tax Reform Law, or Republic Act 10351 he signed and approved into law in 2012. The Sin Tax Law restructured the excise tax slapped on alcoholic and tobacco, imposing higher tax rates on these products to supposedly discourage related vices.

Under the new excise tax reform law, there will be a gradual shift to a unitary taxation for all “sin” products starting from 2013 to 2017.

RA 10351, among other things, mandated the collections of the Bureau of Internal Revenue (BIR) from so-called “sin” taxes to be poured to the government’s health care program. Alcohol and tobacco were being blamed for much of the health problems by those consuming such products excessively.

Records from the Department of Finance (DOF) showed the Sin Tax Reform Law generated P269.6 billion since its implementation from January, 2013 up to the first half of this year. The bulk of revenue collections from “sin” taxes financed the country’s universal health care programs being implemented by the Department of Health (DOH).

In 2013, the incremental collections of the BIR resulting from the passage of this law amounted to P51.17 billion. However, the incremental revenue collections noticeably went down to P50.18 billion. The decline was largely traced to unscrupulous traders behind large-scale smuggling of counterfeit products to the detriment of local cigarette producers.

Of course, this did not escape notice of sharpshooting BIR commissioner Kim Henares who made sure such revenue leakages due to smuggling won’t happen again. Only last October, combined elements from the BIR, the Bureau of Customs and the Philippine National Police (PNP) raided a warehouse in Sta.Cruz, Manila and seized fake products of popular cigarette brands.

As of August this year, the BIR reported excise tax collection from “sin” products rose by more than 27.3%, an increase from the previous year’s tax take of P9.3 billion compared to P11.9 billion.

According to the feisty BIR chief, her agency aims to collect P1.674 trillion in taxes this year. Of this total, P140.4 billion would come from alcohol, tobacco, minerals, motor vehicles and petroleum products.

The BIR is obviously succeeding in its more efficient collection of taxes from “sin” products.

But the law’s intent to discourage or lessen consumption of cigarettes and alcohol products by imposing higher tax rates apparently is not making any dent at all.

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This should enlighten our legislators, especially the authors behind a new tax measure at the House of Representatives to impose what they call as a “sweet” tax.

Two weeks ago, the House committee on ways and means approved a proposed bill seeking to impose a P10 excise tax on sugar-sweetened beverages per liter of volume capacity and its tax rate be increased by four percent every year thereafter effective on Jan. 1, 2017.

The imposition of such tax will purportedly promote a healthier population while at the same time provide government additional revenues of about P34.5 billion annually. After more than a year of hearings and meetings, the House committee on ways and means reportedly approved the unnumbered substitute bill to House Bill 3365 of Nueva Ecija Rep. Estrellita Suansing.

“Studies have shown that consumption of sugar-sweetened beverages increases the risk of developing health problems like blood sugar disorders, obesity, diabetes and other related diseases such as bone fractures, hyperacidity, tooth decay and heart problems,” Suansing cited in her proposed tax bill.

It is a health bill more than anything else, House committee on ways and means chairman, Marikina Rep. Romero Quimbo was quoted saying. Since when did our lawmakers become instant doctors?

Other than “Sin” Tax Reform Law, President Aquino repeatedly vowed no more new taxes. If the Palace resists the more popular bill to reduce tax rates for fixed income earners (which will cut into revenues collections of the government), will the “sweet” tax to collect more funds for state coffers entice P-Noy to break his own word?