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June 29, 2017

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Philippine 'sin tax' bill gathers support

MANILA -- The Philippine Palace is confident that the Senate will approve by Nov. 19 the "sin tax" bill that would generate a minimum 40 billion pesos in revenue and that Congress will pass a reconciled version before the end of the year.

With most senators agreeing in principle with the version and a broad sector of the public supporting it, the passage of the key administration measure should be easy, without President Benigno Aquino marshaling his allies to approve it, Cabinet officials said yesterday.

The tax would target items such as cigarettes and alcohol.

"They have agreed on the minimum 40 billion pesos (US$973 million). Nobody raised an issue against it," Secretary Manuel Mamba of the Presidential Legislative Liaison Office said by phone, recalling the Oct.17 caucus between Cabinet officials and senators in the Senate. "I presume the agreement stands."

In that caucus, Finance Secretary Caesar Purisima, Health Secretary Enrique Ona and Revenue Commissioner Kim Henares told the senators that the measure should generate from 40 billion to 60 billion pesos to have an impact on the population.

A version reported out by Senator Ralph Recto fell short of the administration's target. Recto later quit as chair of the ways and means committee after coming under fire from Cabinet officials.

Public Pressure

"The president has a very clear stand on this. 40 billion pesos is OK, but 60 billion pesos is better," Mamba said when asked whether there was a need for the president to marshal his allies to approve the bill.

"If they want to go against that bill, they will go against public pressure. That's public sentiment," he added.

The Senate is racing against time to pass the measure, with Sen. Franklin Drilon last week reminding his colleagues that they have until Nov. 19 to approve it.

Most of the senators have asked for more time to study the measure before interpellating Drilon, acting chair of the ways and means committee.

If his version is approved, Drilon said 46 billion pesos in additional revenue would be generated from the sin taxes. If this is added to the 48 billion pesos in sin taxes collected in 2011, total collection for the first year would be 94 billion pesos.

As the bill goes into debate in the Senate, Budget Secretary Florencio Abad expressed confidence that both chambers of Congress would reconcile their versions and pass the bill before the end of the year.

"If you were to base it on the strength of argumentation, especially from the superior positive public health and revenue contribution of the measure, broad support from the general public and majority support from both chambers of Congress, we are confident that a sin tax reform law can pass before the year-end," Abad said in a text message.

But the challenge would come from industry players and lawmakers "who represent their constituencies where their businesses are located or which depend on the industry for livelihood and employment, like the tobacco-growing provinces," he added.

Real issue

Abad said the real issue was determining the degree by which the measure could be made into a substantial reform measure, both as public health intervention, as well as a revenue reform measure.

This point of contention could prolong debates and negotiations but "it seems the stakeholders are open to listen and arrive at some acceptable compromise," he said.

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