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MANILA, Philippines – Passing the Sin Tax Bill will make the country compliant with the World Trade Organization (WTO) standards against discriminatory taxation on alcohol, and spare key exports like tuna from countermeasures that could hurt their competitiveness, Senator Franklin Drilon on said Sunday.
At the same time, it will enhance the country’s financial standing, making it easier to attain investments grade status that will cut interest rates on Philippine loans, freeing up more funds for social services, said the chairman of the Senate Committee on Finance.
“We must pass the sin-tax bill in order for us to be compliant with the standards set by WTO on alcohol taxation since our excise tax on spirits and liquor are discriminatory in nature, [favoring] the local brands against foreign products,” Drilon explained.
The WTO is questioning Manila’s alcohol taxation and if this is not corrected, other exports products such as tuna will be adversely impacted, he added.
“May question ang WTO, kasi ang ating excise tax sa alak ay discriminatory, meaning we are in favor of the local products, may discrimination sa foreign brand,” Drilon said.
“So, we must correct that to make sure the scheduling of excise tax on liquor or alcohol is compliant with the WTO standards. If not, it will affect our major export products such as tuna,” he explained.
This means that countries that import our tuna may impose retaliatory measures such as discriminatory tax rates.
“Tatamaan din ang ating mga mangingisda doon sa General Santos City [Our fishermen in General Santos City---which accounts for most of the Philippine tuna exports---will be hit by the retaliatory measures],” he said.
Factor in 2013 revenues
Drilon also said the revenue projection for 2013 has factored in the passage of the Sin Tax bill, which finance and revenue officials estimate will draw in an additional P30-60-billion in fresh funds for the government. Some lawmakers, notably Senate ways and means committee chairman Ralph Recto, have asked the Executive for a firmer basis for their “math.”
If the bill is passed before yearend, the revenue from the higher tax rates will be factored into the 2013 budget. I hope we can pass this anti-cancer sin tax bill because it will boost our people’s health, swell the budget for health including for Philhealth and reduce hospital care costs for diseases arising from tobacco and alcohol,” said Drilon, speaking in Filipino.
Investment grade status
Aside from 2013 revenues, passage of the measure will help enhance the country’s investment grade in the international financial community, Drilon said.
“That [bill’s passage] will contribute much toward our attaining investment grade, something we need to bring down the interest rates for our debts,” he explained.
With this, more funds can be allocated to social services, according to the chairman of the Senate finance committee..
“Kapag naabot natin iyang investment grade sa pamamagitan ng pagdadagdag ng kita ng ating bayan sa pamamagitan ng mga reporma sa buwis tulad ng sin tax, bababa ang interest ng mga utang natin at maidadagdag natin ang matitipid natin sa mga sociall services programs tulad ng 4Ps at Philhealth ng ating mga kababayan,” he said.
Senator Recto earlier guaranteed the passage of Sin Tax bill but stressed it must be based only on realistic, affordable and firm revenues.
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