Solons won’t let Senate ram through TRAIN ‘insertions’
Published in Busiiness Mirror
Members of the House of Representatives have threatened to block the passage of the Tax Reform for Acceleration and Inclusion (TRAIN) Act during the bicameral conference should senators insist on passing provisions that were not included in the approved version of the lower chamber.
Minority Leader Danilo E. Suarez of the Third District of Quezon, Party-list Reps. Alfredo A. Garbin Jr. and Jericho Jonas B. Nograles of PBA on Wednesday complained that the Senate version of the TRAIN has provisions imposing excise taxes on minerals, coals and cosmetic products—all absent in the House version.
This, they said, made the Senate “insertions” unconstitutional, as the 1987 Charter provides that all tax measures must come from the lower chamber.
The lawmakers are referring to Article VI, Section 24 of the Constitution, which provides that “all appropriation, revenue or tariff bills, bills authorizing increase of the public debt, bills of local application and private bills, shall originate exclusively in the House of Representatives, but the Senate may propose or concur with amendments.”
Suarez said he would call for the deferment of the approval of TRAIN should the Senate push the passage of its version of the first tranche of the Duterte administration’s tax-reform program.
“I am hoping that the bicameral conference committee will adopt the House version of the tax package [or] we will call for the deferment of the [tax reform] if the Senate will insist on its version,” Suarez said.
The bicameral conference committee is composed of members from both the majority and minority blocs of both chambers to settle, reconcile or thresh out differences or disagreements on any provision of the bill.
The conferees are not limited to reconciling the differences in the bill, but may introduce new provisions germane to the subject matter, or may report out an entirely new bill on the subject.
The lower chamber has yet to name representatives who will be included as members of the bicameral committee. As a minority leader, Suarez said he will be included as member of the conference committee for the tax-reform package.
The Senate insertions
Suarez noted that higher tax rates for imported coal, as well as coal sourced from Semirara, will eventually affect power rates, as the country is heavily relying on coal-fired power plants.
“The pass-on under the proposal of Sen. [Loren B.] Legarda is 48 centavos per kilowatt additional because we are using 48 percent coal all over the country. That’s a burden,” he said. Nograles, a member of the Joint Congressional Power Commission, said there may be a constitutional question on the proposed 3,000-percent increase on tax on coal.
“It was not introduced by the House but by the Senate. While the TRAIN bill originated in the House, there was no provision in taxing coal. Therefore, it can be interpreted that the Senate introduced a new tax, contrary to the Constitution,” he said.
Nograles, however, expressed confidence that the members of the bicameral conference committee meeting will consider these questionable provisions in their upcoming deliberations. On Tuesday the Senate-approved TRAIN, which is targeting to raise P130 billion in revenues to finance the Duterte administration’s ambitious infrastructure program.
The Senate approved a 3,000-percent increase in coal taxes to be collected in three tranches until 2020, which means the current P10 excise tax will be raised to P100 in 2018, P200 in 2019 and P300 by 2010.
The upper house also adopted a 10-percent excise tax on cosmetic procedures for aesthetic purposes. At the same time, senators voted to double excise taxes on minerals and mineral products and quarry resources that proponents said was intended to promote “responsible mining and environmental protection.”
Garbin said the Senate’s new tax provisions “are the constitutional and legal issues that they need to explain [during the bicameral conference]. We want to know what are their basis.”
According to the Department of Finance (DOF), the TRAIN bicameral conference committee meeting will start on December 1, and Congress is expected to submit the bill to Malacañang on December 11 for signature.
Earlier, House Committee on Ways and Means Chairman Dakila Carlo E. Cua of the Lone District of Quirino said: “We [members of the lower chamber] would like to maintain our version because of the opportunity, so much energy and political capital that we have invested.”
Besides the new taxes on coal, cosmetics and minerals, Sen. Franklin M. Drilon said other contentious provisions in the Senate and House versions of the TRAIN are the imposition of higher tax rates on automobiles, sugar-sweetened beverages (SSBs) and conflicting provisions on value-added tax (VAT) zero rating and lifting of VAT exemptions on senior citizens, among others.
Compassion
Consumers and store owners appealed for compassion as they vowed to intensify their opposition to the proposed excise tax on SSBs, which, they said, will directly hit poor Filipinos.
“If the ‘sweet tax’ is passed, prices of our products will definitely increase, and our customers may not be able to afford them. Our sales and income will drop, and many of us may be forced to close our stores,” Philippine Association of Sari-Sari Stores and Carinderia Owners (Pasco) President Victoria Aguinaldo said.
Aguinaldo, whose group represents 1.3 million sari-sari (small community) stores and carinderia(eateries) all over the country, noted that sweet drinks, such as sodas, iced tea and ready-to-drink juice, account for 30 percent to 40 percent of their total sales.
The Bantay Konsyumer, Kalsada, Kuryente (BK3), an advocacy group defending the interests of Filipino consumers, has supported the campaign of Pasco in opposing the SSB tax, which, it said, would hit hard the Class D and E consumers.
BK3 Convenor Louie Montemar said his group support Pasco’s actions because what is at stake in the issue is the interest of the poor consumers. He said the latest Senate version of SSB taxes was disappointing. “We appeal to our legislators to show compassion to the ordinary Filipino, enough with these consumer taxes.”
Montemar said to generate more revenues to support the “Build, Build, Build” infrastructure program, the government should turn its attention to products patronized by the rich and stop the revenue leakage in the Bureau of Customs.
In the Senate, the approved version of the SSB tax was set at P4.50 for every liter of sodas, iced tea and ready-to-drink juice. This was proposed by Sen. Joseph Victor G. Ejercitoas a compromise to the P10 rate passed by the House of Representatives.
This 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.
Sen. Ralph G. Recto earlier described the SSB tax as the most controversial and sensitive provision of the TRAIN bill because of its expected impact on the majority of the population.
“We are going to hit the consumers, especially the poor, who will not benefit from the tax reduction to begin with. They will not benefit from the tax reduction, to begin with, and we are going to hit them with P280 billion of consumption tax,” Recto said.
‘One step closer’
Finance Secretary Carlos G. Dominguez III said the government is now one step closer to reforming the country’s tax system for the first time in over two decades, with the passage of the Senate version of the TRAIN.
The tax reform will provide a steady revenue stream to the Duterte administrations ambitious infrastructure buildup, which will require at least P8 trillion over a five-year period.
The finance chief expressed hopes that both chambers could wrap up bicameral deliberations on the first of the government’s five tax-reform packages in time for the submission of the final version to President Duterte by December, so that a new law could be signed and implemented as scheduled by January 2018.
“The Senate’s timely approval of its TRAIN version moves the government one big step closer to overhauling the tax system for the first time in two decades, with the primary benefit going to 99 percent of the country’s taxpayers, who are to get higher take-home pay as a result of substantial cuts in their personal income-tax rates or, better yet, outright exemption from income taxation,” Dominguez said.
Image Credits: AP/Bullit Marquez