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Government must keep vigilant in its position to reform the current structure on sin taxes in the light of the continuing lobby of the industry's mega monopoly partners Philip Morris and Fortune Tobacco to keep the status quo.

It’s a good thing that P-Noy had -- as soon as news reached him -- certified as urgent the proposed restructuring on alcohol and tobacco product taxes. For a president who can’t stay away from cigarette smoking, his quick and decisive action regarding this controversial bill is admirable.

The bill, if passed in its current form, is expected to raise around P60 billion in new revenues for the government. P- Noy had personally said, however, that the reform of current sin taxes would remove the monopoly of one multinational company that is a product of a merger over its competitors.

Expect a classic David and Goliath epic once again, one that is perhaps even going to be more thrilling than the case waged by the people of the Philippines versus the Chief Justice of the country. This time, David might need more ammo to fell down this giant without a conscience.

We have a number of committed and fearless House Representatives who delivered a good job by delivering the bill in its still fighting form for plenary deliberation. They deserve a big applause.

For one, Cavite Rep. Joseph Emilio Abaya, principal author of the bill, had kept vigilant in pushing for a simple single-tiered tax system. He is joined in by Batanes Rep. Dina Abad in pushing for radical changes in the tax structure.

Health of public not of the monopoly

The battle field has moved now to the House floor after Davao City Rep. Isidro Ungab, Chairman of the Ways and Means Committee, sponsored House Bill 5727 for plenary discussion. Aside from generating much-needed additional revenues for the government, he stressed that the law when passed will also provide for the social development needs of Filipinos, particularly in the health services area.

The current profile of sin taxes has perpetuated a system that exacerbates health issues related to alcohol and cigarette use. Already, the Philippines is considered as having a youth population that is one of the fastest in picking up the smoking habit. 

This is largely due to the fact that cigarettes are so cheaply priced that even a child barely in his teens can buy a stick from any of the small neighborhood stores in the vicinity of his home, even near his school.

As more of our lawmakers deliberate on the Abaya bill, innuendoes about departing from the original wording – and consequently, impact – of the proposed law are now circulating.

Being staunch supporters of keeping the current flawed state of the excise tax structure, the European Chamber of Commerce and Industry and the Associated Anglo-American Tobacco Corp. (AAATC) have openly urged the House to amend the Abaya bill, or House Bill 5727.

It is laughable how these lobby groups have chosen to be concerned about the health of their respective industries over the health of the Philippine nation by saying that its currently low-priced alcohol and cigarettes will become unaffordable to many Filipinos under the proposed law.

Let us not forget that low-priced cigarettes are the main reason why the Philippines has a high rate of illnesses associated with tobaccouse. In fact, smoking has been singled out as the first cause of stroke and heart attack among Filipinos, a figure that has risen now to approximately 50,000 deaths a year.

Unacceptable compromises

Any compromises to the Abaya bill will not only water down the intended benefits being eyed by the Aquino government from a sin tax restructuring, but even continue to worsen the health of a nation imperiled by cheap tobacco and alcohol.

One cigarette manufacturer has even invoked the threat of rising cases of smuggling should government pass the proposed law in toto. It has even cited the possibility of tobacco farmers losing their farms and livelihood and tobacco industry workers losing jobs.

Smuggling is a concern that other agencies in government should deal with, and should not distract our lawmakers from introducing just corrections in the current system. Even with the proposed new tax rates, tobacco and alcohol products in the Philippines will continue to be among the lowest priced in the Asian region.

The tobacco farmers, contrary to allegations of those opposing the Abaya bill, will benefit more when government revenues on cigarettes increase. The tobacco farmers are assured of a bigger share in the tobacco taxess and the additional funds allotted to them may be used to improve quality of production for more export opportunities or may be used to finance farmers who wish to develop alternative crops to tobacco.

Fair tax system

As my friend Ted Faillon in the radio industry has commented, if we are really strict and righteous about reforming the current sin tax structure, there is no need to consider reducing the current four tiers into two, and later, to one. He says let’s just go straight to a one-tier structure.

But being a pragmatist, extreme changes are wont to disrupt rather than pave the way for change that will in the end do good for everyone. The current flawed and biased system has been in place for more than a decade and prudence dictates that we go slowly but in the right direction.

For now, it is enough that our lawmakers in the Lower House of Congress focus their attention on keeping on the right road towards reforming our sin tax system. The Abaya bill is a fair tax system that has balanced the concerns of all current stakeholders, and more so, our countrymen.

As P-Noy could well put it, it is the “daang matuwid” in reforming the manner by which liquor and cigarettes sold in the country are being taxed. That said, let’s stick to that road.

FilOil Flying V pre-season tournament

National University Bulldogs and San Beda Red Lions continue to roar the loudest in this tournament and are assured of their places in the quarterfinals. According to Joey Guillermo of FilOil Flying V Sports, organizer of these popular pre-season games, the quarterfinals will include top four teams of each group in a cross-over knockout games to determine the semi-finalists and eventually the final pairing for the championship.

Champions League (PCCL) website, www.CollegiateChampionsLeague.net, is launching soon a survey to determine the top choices for the Final Four teams and the top three players of the competition. Those submitting the most number of correct choices will receive gifts from the sponsors. Visit www.CollegiateChampionsLeague.net for more details.

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at reydgamboa@yahoo.com. For a compilation of previous articles, visit www.BizlinksPhilippines.net.

Source: The Philippine Star; Business; 28 May 2012