MANILA, Philippines - The National Economic and Development Authority (NEDA) drew the ire of lawmakers during a recent hearing on excise taxes at the House of Representatives for proposing to slap new taxes, including restructuring excise taxes, on alcohol and tobacco products.
Rep. Eric Singson Jr. for one, said the government cannot address the country’s ballooning budget deficit, which is projected to hit P290 billion next year, by imposing new taxes.
What needs to be done Singson said is to plug the leakages.
“The problem is tax leakage so why not improve tax administration instead,” said Singson, vice-chairman of the house ways and means committee.
Singson believes that the tobacco industry is fast-becoming the milking cow of the government. “NEDA should remember the promise of President Aquino not to impose new taxes,” he said.
Rather than pushing for new taxes, Singson said NEDA should bat for measures that would improve tax administration and collection, such as amendments to the Tariff and Customs Code and the Bank Secrecy Deposit Law to address the problem on individual tax leakages.
“There is no need to amend the excise tax law on tobacco and alcohol products since the tobacco industry has been exceeding collection targets set by the government,” he said.
Rep. Victor Ortega (1st District, La Union) echoed Singson’s position, saying that NEDA’s proposal which will result in the adoption of a unitary rate for tobacco products is “highly oppressive” particularly for the tobacco industry.
“Imposing a single tax rate for cigarettes will unreasonably increase the excise tax on most of the local cigarettes sold in the market. This will result in a lower demand for cigarettes, which would lead local cigarette manufacturers to cut down on their purchases of local tobacco leaf,” Ortega said.
Ortega, who hails from one of the biggest tobacco-producing provinces in the country, said the average monthly excise collection from cigarettes for the months of January to August this year was P2.406 billion.
Last September, tobacco tax collections amounted to P2.839 billion.
According to the NEDA, individual tax leakages alone could total to at least P214.14 billion for 2011 to 2016 or P35.69 billion a year.
Citing estimates made by the Department of Finance, NEDA said that about 35 percent of potential tax collections by the Bureau of Internal Revenue and 20 percent of the collections of the Bureau of Customs are lost to leakages.