^

Business

Haste makes waste

HIDDEN AGENDA -
The House of Representatives has started in earnest work on the new tax bills being pushed by the Arroyo administration.

Strange, but in their apparent haste, legislators are beginning to find holes in the hastily prepared proposals from the executive department.

Take the case of the so-called "sin products." Finance officials have virtually conceded right on the first public hearing of the House ways and means committee that government may not actually realize the revenues it badly needs to generate from cigarette and alcohol excise taxes.

Finance officials are pushing for the indexation of excise taxes on cigarettes and alcoholic products or simply put, adjusting the tax rates by the corresponding percentage increase in inflation. Cigarettes are currently being taxed based on four classifications depending on its net retail price – low, medium, high and premium while alcoholic products are based on three, minus the premium bracket.

In its presentation before Congress, the DOF pointed out that despite the increase in sales and acceleration in the prices of tobacco and alcohol products, the collection of excise taxes on these so-called sin products is expected to drop by 9.5 percent to P52 billion this year.

Since the passage of the Comprehensive Tax Reform Program in 1987, the DOF noted that excise tax collection went on a steady decline. In the same public hearing, BIR officials confirmed that despite recorded increases in the annual cigarette production, excise tax collections are in an apparent free fall.

It doesn’t take an economic whiz kid to figure out that in times of economic hardship, consumers logically switch to lower priced brands. As they change consumption preference to cheaper brands, consequently government earns lesser revenues.

Basic algebra teaches us that when you multiply four rates by percentages, the gaps between rates will widen. Therefore, the higher rates get a bigger increase. With prices widening, you only exacerbate the practice of switching to cheaper brands.

Surprisingly, congressmen are wise to this loophole in the DOF presentation. A total of 72 congressmen have filed House Resolution 91 seeking a congressional inquiry on alleged tax leakages. In the same resolution, House members labelled the indexation proposal as "regressive."

In the mad rush to prepare tax proposals, the DOF may have hit a snag in Congress and may not have to wait a little longer before they could get what they want from the legislature.
Amending the Bank Secrecy Law
It would be interesting to find out who among and how many of our public officials would agree to a proposal to amend the Bank Deposit Secrecy Law.

Senator Mar Roxas has just filed a bill that seeks to allow the Office of the Ombudsman to inspect all the bank deposits of all public officials.

Under Senate Bill 1760, each public official shall be required, within 30 days from assumption of office, to execute a document expressly authorizing the Ombudsman to scrutinize the official’s bank deposits and deposit substitutes, including those in the name of his or her spouse and children under 18 years old. The authorization shall cover all bank deposits and substitutes, whether or not listed in the official’s statement of assets and liabilities.

At present, due to the "absolute confidentiality" of bank deposits, the Ombudsman may examine a deposit only with the strength of a court order.

Roxas’ bill seeks to amend two laws – The Bank Deposits Secrecy Law (Republic Act 1405) and The Code of Conduct and Ethical Standards for Public Officials and Employees (RA 6713).

Under the bill, the Ombudsman shall also be empowered to obtain from all private entities all documents that may show the assets of any official, including his or her business interests and financial connections in previous years, including the year when he or she first assumed office. At present, the Ombudsman may obtain pertinent documents only from "all appropriate government agencies".

Among the private entities that shall be required to extend cooperation to the Ombudsman are stockbrokers, mutual funds, pre-need providers, insurers and foreign currency traders that may be used to stash ill-gotten wealth.

Under the Unexplained Wealth Forfeiture Law (Republic Act 1379), an official’s "grossly disproportionate" assets, including exceedingly large bank deposits, are presumed to have been illicitly acquired, unless proven otherwise by the erring official.

This means the erring official must establish that he or she lawfully acquired the assets in question. Otherwise, the assets shall be seized and forfeited in government’s favor.

Would such proposed measure fly in Congress? Let’s find out because I’m betting it would not.

For comments, e-mail at [email protected]

vuukle comment

AMENDING THE BANK SECRECY LAW

BANK

BANK DEPOSIT SECRECY LAW

BANK DEPOSITS SECRECY LAW

CODE OF CONDUCT AND ETHICAL STANDARDS

COMPREHENSIVE TAX REFORM PROGRAM

HOUSE OF REPRESENTATIVES

HOUSE RESOLUTION

OFFICE OF THE OMBUDSMAN

REPUBLIC ACT

  • Latest
  • Trending
Latest
Latest
abtest
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

Get Updated:

Signup for the News Round now

FORGOT PASSWORD?
SIGN IN
or sign in with