Enrile rejects House version on Sin Tax bill

SENATE President Juan Ponce Enrile said on Monday the Senate will totally reject the House version on Sin Tax bill imposing 708 percent increase in taxes on tobacco and alcohol which retailers claim will spike inflation rate on the economy.

“We will not pass the House version . We should have a reasonable taxation, not arbitrary. Hindi naman iyan caimito o mangga na bunga nang bunga lang,” Enrile said.

Enrile said there is no guarantee from government economic managers that raising taxes on sin products will reduce consumption and finance the health sector.

“Today there is a levelling on the cigarette users of which the government tendency on the bill is to reduce consumption, logically it will also contrast on the taxation of the government,” Enrile explained.

“At certain point, magkano ang mababawas, we don’t know how much taxes na mababawas kung mababawasan ang maninigarilyo. But, definitely we will approve the tax bill but not the one they are asking for because P60 billion projected revenue ay mataas na panaginip iyon. I have been involve in taxation as professional servant, what they are saying will not happen,” Enrile added.

The House of Representatives has approved a bill imposing a 708 percent tax increase on low-priced cigarettes, or those costing 11.50 and below per pack, which accounts for 60 percent of the market.

The Senate is now discussing the House bill and its own counterpart proposals on the excise tax hikes on tobacco and alcohol products.

Inflationary effects of House version

Meanwhile, the Philippine Amalgamated Supermarkets Association Inc., (PAGASA) expressed concern over the  economic impact of the House version which they said will lead to a spike in inflation rate and consequently on the production costs of other goods and services.

“This dire effect would further diminish the purchasing power of the poorest of the poor and fixed-wage earners, whose incomes remain stagnant amid rising inflation, “Mr. Steven Cua, PAGASA president, said.

Pagasa,  which includes as members the Price Warehouse Club, Welcome Supermarket Inc. and Bigbest, has 142 member-stores and outlets nationwide.

Cua said inflation could rise even further if cigarette manufacturers pass on the tax hikes to consumers. “The rise in inflation could be much higher if manufacturers take additional margins from the tax-related price increase.”

Inflation refers to the annual percentage change in the Consumer Price Index, which represents the average prices of a fixed basket of goods and services commonly purchased by households. In the Philippines, cigarettes are part of this basket of goods and services, Cua said.

The projected hike in inflation as a result of high cigarette taxes does not yet take into account the possible increases in petroleum products, upward adjustments in electricity and water charges and higher food prices, Cua noted.

The Bangko Sentral ng Pilipinas projects that the inflation will remain low in the next two to three years, with a rate setting between three to four percent owing to a weak global economy.

It did not take into consideration the possible impact of new tax measures, such as the government proposal to drastically increase cigarette excise rates, in making its forecast.

“A spike in the inflation rate could potentially imperil the country’s competitiveness, hamper the growth of exports and even jeopardize the country’s standings with ratings agencies,” he noted.

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