FPI bucks additional ‘sin taxes’

The Federation of Philippine Industries (FPI) yesterday said they do not support additional taxation for tobacco and liquor.

In a telephone interview, FPI president Jesus L. Arranza said tobacco and liquor are already being taxed heavily.

“The answer to our problem is not additional taxes for companies,” he explained.

This was contrary to the stand made by another business group – the Philippine Chamber of Commerce and Industry (PCCI).

According to Arranza, PCCI expressed its support for the increase in taxes against tobacco and liquor without first consulting its members which include manufacturers of the said products.

In an earlier statement, Donald Dee, PCCI chairman emeritus, said that it is essential to change the tax policies in the country to reduce reliance on corporate and income taxes.

“Ultimately, the basic premise of taxation has to go beyond collecting and increasing corporate and income tax. If we are to sustain our economic momentum amidst the global oil crisis, we will need to further study other tax alternatives such as sin tax and possibly text tax and implement them for the common good of everyone,” Dee said.

“Sin tax is a key measure that requires strong political will and efficiency in tax collection and administration. Products under this wing are considered to be non-essentials; consumers of these products must be willing to pay a premium in availing them, to help the domestic economy and the various sectors affected by significant movement in oil prices and peso appreciation,” he explained further.

In addition to cigarettes, spirits and liquors, Dee said there is a need to increase levies and registration fees on luxury cars, private jets and yachts and other luxury items that are deemed unnecessary to everyday living.

According to Arranza, whatever additional revenues raised from this new tax measure must be channeled directly to industries affected by the sharp increase in prices.

He said that such a reform in the tax system will provide the needed support to key sectors that are affected by the sharp movement in oil prices, specifically the transport sector.

“Foremost among other beneficiaries to this measure must be the transport sector. It’s high time that our transport groups are given subsidies based on agreed trigger prices relative to the movement of oil prices in the world market,” he said.

Dee, who is also a Special Envoy for Trade negotiations, said political will is needed in order to implement unpopular reforms like tax on text.

Likewise, Dee underscored the need for an equitable balance as regards their contribution and that of local consumers’ and entrepreneurs’ to the domestic economy given the economy’s over dependence on export revenues and OFW remittances.

“The key is to move the domestic economy forward through innovative and objective revenue alternatives. We cannot rely on exports and OFW remittances all the time for revenue inflows. We, as consumers and business people must do our share in coming up with tangible sacrifices to help boost our local economy,” he said.