Supporters of the administration in Congress are eyeing the swift passage of two priority tax measures at the House of Representatives next week.
In a media forum on Wednesday, Albay Representative Joey Salceda said they expect the proposed Alcohol Tax adjustment bill to breeze through the committee level once he invokes Section 48 of the House Rule during their session on next Tuesday.
Under Section 48, bills which were already approved in third reading in the previous Congress may be “disposed of as matters already reported upon the approval of majority of the members of the committee present, there being a quorum.”
“In short please expect that the alcohol taxes will be approved by Tuesday in the first meeting,” Salceda said.
Salceda, who heads the Houses of Representative’s Committee of Ways and Means, said they opted to prioritize said tax reform based from the outcome of the pre- Legislative-Executive Development Advisory Council (LEDAC) meeting last Monday.
To recall, the alcohol tax reform bill was passed in third reading in the 17th Congress.
On Aug. 14, the lawmaker said his committee will then proceed tackling the Corporate Income Tax and Incentive Reform (CITIRA), which is another of the four revenue generating bills of the administration.
The two other income measures being pushed by the administration, Chua said, is on Property Valuation and on Passive Income taxes.
Health concern
Finance Undersecretary Karl Kendrick Chua said they are coordinating with the Congress for the immediate passage of the “sin” tax for alcoholic beverages not only for revenue purposed but also for its health implications.
“As the people grow richer, they could afford [more alcoholic beverages]. But the health cost, they could not afford so we will help them through this tax measure,” Chua said.
Salceda agreed with Chua citing new studies, which he claimed “there is no such thing as safe alcohol consumption.”
Chua said DOF is supporting the increase of sin taxes for alcoholic beverages from it current rate of P25 to P28 per litter to P40 per litter.
He said the estimated P33 billion revenue to be collected from the new sin tax will be used for the implementation of the government’s Universal Health Care program.
Too low
Another sin tax reform being planned by the administration for the 18th Congress is for electronic-cigarettes and vapes, which is now becoming a popular substitute of smokers for cigarettes.
Chua said they are now eyeing to increase the tax for vape products, which is currently at P10 per pod, the 0.7 milliliter of nicotine mixed and liquid.
He said they want it to be increased P45 so it will be similar to tobacco products.
Salceda said they are not anticipating any opposition for the proposal since vapes are considered as a luxury item.
“If you buy it [vape] right now, it ranges between P1,600 to P2,500…the poor cannot afford to spend P2,500 for a vice,” Salceda said.
Lone critic
As to the CITIRA bill, Salceda said they projecting minimal resistance from its passage after they already complete the necessary consultations in the private sector for its provisions.
The lawmaker said only the semiconductor industry is against the tax reform, which aims to lower corporate income tax and review of existing tax incentives given to some companies.
He noted the review of tax incentives is badly needed especially for some semiconductor firms, which stagnated in the last three decades.
“My question to them is where is the growth and where is the forward linkages? There is none. They stayed as is,” Salceda said.
Employment impact
While the said industry generated jobs and revenues, he said it is dwarfed by the amount of incentives the government provides to them.
“The electronics [sector], they are delivering P9.57 billion a year. But the [government] incentive [given] to them reach P234 billion,” Salceda said.
“We are spending P454,000 to produce one job [in the electronics sector]. I think that is too expensive,” he added.
Salceda said they expect there will be no or even minimal jobs displacement from the passage of the CITIRA law since the affected firms may be given a long as a 7 year transition period to adopt its new rates.
“So do you expect any labor displacement if you are given 7 years of the most generous incentive package in the whole world? I looked at all the incentive package in Asia certainty CITIRA is the most generous. The only thing is it is no longer forever,” Salceda said.
The government expects the CITIRA will generate 1.4 million net employment once implemented.