Aquino allies sitting on tax measures, says lawmaker

MANILA, Philippines – President Aquino’s congressmen-allies are sitting on tax measures that could help the administration bring down the huge budget deficit, opposition Rep. Danilo Suarez of Quezon said yesterday.

He made the statement in the course of a hearing of the House committee on ways and means, which Batangas Rep. Hermilando Mandanas chairs.

Aquino and Mandanas belong to the Liberal Party.

Among other proposals, the hearing tackled a bill of Suarez that seeks to restructure the system of excise taxation on liquor, distilled spirits, cigarettes, and cigars, or the so-called “sin” products.

The Quezon lawmaker, a staunch supporter of former president and now House colleague Gloria Macapagal- Arroyo, had promised to help the Aquino administration solve the budget deficit problem Aquino has inherited from Mrs. Arroyo.

He told Mandanas that the new Congress will already be six months in existence this month and that the ways and means committee has yet to endorse a tax measure that would narrow down the budgetary shortfall.

He said when 2011 kicks in next month, lawmakers would practically have only one year to work on tax bills and other pending legislative proposals.

“In 2012, most of us will already be campaigning for the (congressional) election in May 2013. Maybe, the chairman will be campaigning for a higher post,” he said.

Mandanas is on his third and last term as a congressman. He was former governor of Batangas.

Under Suarez’s restructuring proposal, the present excise tax system on liquor, distilled spirits and other alcohol products would be converted into an ad valorem (based on value) scheme.

As for cigarette taxes, the veteran lawmaker wants the present four-tier tax structure reduced to just two rates.

He told his colleagues that because of the failure of Congress to adjust cigarette taxes since 2004, “we now have the cheapest cigarettes in this region, if not in all of Asia.”

“We still have cigarettes costing only P9 per pack (including the tax). This encourages early smoking among the youth. In our province, it is a status symbol among 13- to 14-year-olds to have a pack of cigarettes in your breast pocket,” he said.

He said under his proposal, the cheapest cigarettes would cost P16 per pack.

Batanes Rep. Henedina Abad, who also belongs to the Liberal Party, has filed a similar bill reforming the tax structure on tobacco products.

Suarez also said he does not buy the argument of some Northern Luzon congressmen that restructuring cigarette taxes would prejudice tobacco farmers since manufacturers would no longer buy poor-quality tobacco leaves because they cannot use these for cigarettes that would sell at a higher price.

“I think that all of the farmers’ produce – whether good quality or poor quality – would still be bought. Manufacturers will have no choice but to buy it since supply is insufficient. In fact, they import 60 percent of the tobacco leaves they need,” he said.

Mandanas referred all sin tax bills to a subcommittee headed by Ilocos Sur Rep. Eric Singson Jr., who, in previous hearings, has criticized proposals to reduce the four tax rates on cigarettes to two, claiming these would displace thousands of tobacco farmers in his province and other tobacco-producing areas.

Singson’s father headed the Northern Alliance, which had successfully blocked bills in the previous Congress that sought to adjust cigarettes taxes, including those introduced by Suarez.