Philippines sin tax bill in limbo

Manila (Philippine Daily Inquirer/ANN) - The so-called Recto report that proposes additional taxes for tobacco and liquor products drastically lower than what the Philippine Palace wants is now in limbo.

Senator Franklin Drilon, acting chairman of the Senate ways and means committee, will call a meeting of panel members on today to decide whether the report will be retained or brought back to the committee.

Sen. Ralph Recto resigned as committee chairman on Monday after complaining that his effort to sponsor the bill imposing an additional 15 billion pesos (US$363 million) "sin tax" on alcohol and tobacco products failed to get the support it needed from officials of the health and finance departments.

Recto alluded to Health Secretary Enrique Ona, Finance Secretary Caesar Purisima and Internal Revenue Commissioner Kim Henares during a privilege speech announcing his resignation.

The officials expressed disappointment over Recto's committee report the day after his sponsorship speech. They said they had expected Recto to present a report that adhered to Palace's proposal to raise 60 billion pesos.

Supporters of the Palace's proposal said higher sin tax rates would not only reduce deaths from diseases due to tobacco and liquor consumption, but also generate more funds for the government's health programme.

Resignation accepted

Senate Majority Leader Tito Sotto announced the chamber's decision to accept Recto's irrevocable resignation as ways and means chairman immediately after a caucus Tuesday afternoon.

Drilon as vice chairman was designated acting chairman after the caucus.

Committee members expected to attend the meeting Drilon called for on Wednesday include Senators Francis Pangilinan, Teofisto Guingona III, Sergio Osme?a III, Francis Escudero, Gregorio Honasan, Manuel "Lito" Lapid, Ramon Revilla Jr., Antonio Trillanes IV, Manuel Villar, Edgardo Angara, Miriam Defensor-Santiago, Joker Arroyo and Pia Cayetano.

Committee or plenary

First on the agenda is whether to let the committee report stay as Recto had presented it during the plenary session last week, according to Drilon.

"If it stays in the plenary, it becomes the basis for the debates," Drilon told the Inquirer in an interview after the caucus.

"If the decision of the (members) is to recommit it to the committee, then the report is withdrawn from the plenary and the committee will determine whether to refile the report as is or have a new report," the acting ways and means chairman added.

"To recommit means you take it out of the agenda of the plenary," he further explained.

No more hearings

Drilon said there was no more need to conduct additional hearings as those conducted by Recto "were enough already."

Before the caucus, Senate President Juan Ponce Enrile and Drilon offered two conflicting proposals on how to go about the sin tax bill after Recto stepped down.

Drilon said whoever was appointed acting chairman in Recto's place would continue to sponsor the bill on the floor despite Recto's announcement that he was withdrawing it from the plenary for lack of support from its proponents from the executive branch.

Drilon cited the opinion volunteered by Escudero that the withdrawal of a committee report would need the concurrence of all committee members or the plenary where it was presented when the chairman delivered his sponsorship speech.

After Recto announced his resignation, Escudero told the plenary that a committee chairman could not submit a committee report on his own since he would need the signature of the majority of the members of the committee before doing so.

This means the withdrawal of a committee report "also cannot be done by the chair on his own, and would either necessitate the majority vote of the committee members at the very least or by plenary," Escudero added.

Drilon invoked public interest in discussing the same report, saying that senators can debate on its provisions and introduce amendments, specifically those that would bring more revenues.

Personal stand

Drilon said his "personal stand" would be an annual revenue collection "closer to 60 billion pesos" that proponents from the Palace had sought.

The senator said the government's current PhilHealth insurance budget this year, for example, was only 12.5 billion pesos.

"We would need at least 12.5 billion pesos more for the 5 million new enrollees," he said.

"Senator Recto's replacement would not start from scratch. The Senate can eventually adopt a higher revenue target. That's always a possibility given the period of amendments. Even if the senator has not resigned, the committee report is still subject to amendments on the floor," Drilon explained.

Not so, Enrile countered.

Since Recto resigned because the Palace officials concerned with taxation were displeased with his report, "we have not improved the situation if the new chair adopts (his) report," the Senate President said.

Asked if the ways and means committee would like to start from scratch and hold a new round of hearings, Enrile said: "Yes, in effect. That's my reading."

He added that whoever was chosen to chair the committee would "unlikely" continue sponsoring Recto's report on the floor "because it has become controversial. They (executives in charge of finance and revenues) do not like that version."

Enrile said that the new chairman would now likely choose between a sin tax bill filed by Senator Santiago that observers said veered close to the revenue targets of the Palace or another measure proposed by Sen. Panfilo Lacson.

"Which one will be adopted we do not know. But since there's an evident desire on the part of the proponents to get the maximum revenue, then logically whoever will take over from Senator Recto will probably adopt the bill of Senator Santiago and that will have to be debated on the floor," the Senate President said.

Question hour

Enrile and Sotto said separately that it was likely that Purisima and Ona would be invited to a Question Hour so they could personally answer queries from senators about the sin tax bill.

The Senate needs to pass the measure before it tackles the 2-trillion pesos proposed budget for 2013.

Drilon as Senate finance chairman earlier said the chamber needed to pass the sin tax bill since its target revenues had already been factored in the 2013 budget.

The House of Representatives is expected to push for its own version of the sin tax bill when the measure gets tackled in the bicameral conference committee, said its principal author, incoming Transportation Secretary Joseph Abaya.

Abaya said it was not yet the end for the House version of the measure, which would hike revenues through reforms in the excise tax on tobacco and alcohol products to about 30 million pesos a year.

He said the House version could be pushed in the bicameral conference committee even though he would no longer be around to do it himself.

He is leaving his post as Cavite representative and House appropriations chairman and moving on to head the Department of Transportation and Communications, now that he has shepherded the 2013 budget through third and final reading in the House.

"I'm sure the House will field a capable panel to fight for our version," he told reporters.

Not the end

Asked if he was disappointed at the Senate version, he said there was still the bicameral conference committee, which is where the final version of proposed laws are crafted before being ratified by both chambers of Congress.

"I'm sure a more able-bodied person will be there to fight it out. These are all in transition. Not the end still," he said.

He said he wanted to see reforms in the sin tax bill that would deter people from smoking and drinking. These include the dismantling of annexes in the internal revenue code that shield certain products from higher taxes.

With a report from Leila B. Salaverria

*US$1=41.2 pesos

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