Bicam next battleground
Published in Malaya
Some sectors are unhappy about certain portions of the Senate version of the Tax Reform for Acceleration and Inclusion (TRAIN).
Isidro Consunji, DMCI Holdings Corp. chairman; the Department of Energy (DOE); and Laban Konsyumer Inc. (LKI) have all expressed apprehension over the increase in coal tax, while consumer and sari-sari store groups still resist the tax on sugar-sweetened beverages (SSBs).
Senate Majority Leader Vicente Sotto III, meanwhile, pushes for the adoption of the Senate version on the excise tax on motor vehicles as this would raise more revenues.
Consunji said legislators should consider taxing all forms of energy source to level the playing field.
He said the proposal to slap a 3,000 percent excise tax on coal alone is “unfair”since it will make the other fuels more competitive.
“(They should) tax everything,” said Consunji.
He said the government cannot make other energy sources more competitive “by making one fuel more expensive because it is discriminatory.”
He pointed out the tax should not just cover local coal but should apply to imported coal as well.
“Again, that’s (not taxing imported coal) discriminatory. (Government) will be giving advantage to foreign coal and this will run counter to the incentives being given to local energy producers,” said Consunji.
DOE and LKI are united in their stand that the proposed increase on coal excise tax should be studied further as it will greatly impact the price of electricity and cement.
“It’s a problem that we are facing because we all know that our tariff is one of the highest, if not the highest in Asia. With the passage of additional tax for coal, that would really have an impact. There are studies on its impact, but we still need to validate it,” said Alfonso Cusi, DOE secretary, at the Joint Congressional Power Committee hearing in Pasay City.
Cusi said the plan comes at a time when “DOE is looking for ways to bring down our tariff so that we can be competitive in attracting the manufacturers in our country.”
Hesaid recommendations and suggestions to adjust the proposal are still available during the bicameral session.
“We will state our case, make them aware of our concern that this is an issue. But of course, there’s a bigger… Our country needs the tax reform, we just have to find a solution. My team is studying the cost implications and the impact before we can make our paper,” Cusi added.
Victorio Mario Dimagiba, LKI president, highlighted the legality of increasing the coal excise tax as well as its effect on the price of cement.
“In addition to power, another industry that is highly dependent to coal is cement. We computed that its likely impact per bag using Australian coal is at $80 per metric ton if you peg it at P51 per dollar. Straight computation, one bag will increase by P3, P6 and P9 under the proposed increase in excise tax. That is only a benchmark, but as you go into different phases of the market, it can go higher,” Dimagiba said.
He cited Article 6, Section 24 of the Constitution which states that all tariff measures should originate in the House, and the Senate can only propose concurrent amendments.
“There is also a legal issue and they confirmed that the increase in coal excise tax was not included in the House version. It is not an amendment, (it is) an amendment of the law but not an amendment of the House version (of the proposal),” Dimagiba said.
He said the law also states that all taxes should be equitable.
“Whether it’s local or foreign, they should be equal. Otherwise, those that are not slapped an additional tax will benefit,” he said.
According to Consunji, no matter the form of the tax, the consumers will shoulder the additional burden since excise tax are pass-on taxes, resulting to a hike in electricity rates.
“It is not us who will be affected. Because it will be passed-through (toconsumers),” he said.
Meanwhile, BantayKonsyumer, Kalsada, Kuryente (BK3) and the Philippine Association of Sari-Sari Stores and Carinderia Owners (PASCO)continue to resist the tax on SSBs despite the lower rate approved at the Senate, saying this would still hurt the poor.
The groups said the Senate-approved version of the SSB tax would result in higher prices of beverages commonly used by the masses.
The Senate-approved version of the SSB tax was set at P4.50 for every liter of soda, iced tea and ready-to-drinkjuice, proposed by Sen. JV Ejercito as a compromise to the P10 rate passed by the House of Representatives.
But the BK3 and PASCO said this rate is estimated to translate into the following increases: for powdered juice and iced tea, from P9 to P13.50 per 1 liter sachet; for sodas, from P16 to P20.50 per liter; and for ready-to-drink juice, from P20 to P24.50 per liter.
The groups intend to intensify their opposition at the bicameral level, appealing to the legislators for compassion to the ordinary consumers.
Meantime, Sotto said the government could raise more revenues from automobile excise tax if the proposed two-tier tax scheme under the Senate version of TRAIN would be adopted in the bicameral deliberations.
Sotto noted the Senate version introduces simpler and more realistic tax rates that would even help discourage smuggling.
He said the five-tier automobile tax scheme under the House version imposes higher taxes on premium and luxury cars than the low-end models. House Bill 5636 seeks to impose a staggered increase in automotive excise taxes starting next year until 2019.
The Senate version came up with a different scheme that imposes 10 percent excise tax on vehicles below P1 million, and 20 percent to automobile worth more than P1 million.
Sotto said the version of the Senate could yield P17 billion in revenues which is higher than the estimate on the House version.
He added under the House version, a luxury car worth P6 million would cost P12 million if the new rates would be imposed.
Such huge increase would not only kill the high-end car market but also encourage smuggling.
Congress is scheduled to convene in a bicameral conference next week to be able to have the final version transmitted to the President before it goes on a break on December 15. – JP Lopez, J Macapagal