House leader welcomes court ruling rejecting petition against new sin tax law
THE Chairman of the House Committee on Ways and Means today welcomed the decision of the Manila Regional Trial Court which dismissed a petition filed by liquor manufacturers to stop the implementation of the new sin tax reform law or Republic Act 10351.
Rep. Isidro Ungab (3rd District, Davao City) said the court ruling bolsters the campaign of the Aquino government to raise revenues for more health services for the people.
“The Bureau of Internal Revenue will have to implement the sin tax law passed by Congress last year as the agency is at the forefront of the revenue collections campaign,” said Ungab.
The Distilled Spirits Association of the Philippines (DSAP) earlier lodged a 30-page petition questioning the constitutionality of RA 10351, saying it imposes “double taxation”. According to DSAP, excise taxes on a finished product need not be paid, as levies on the raw materials used have already been collected.
The petition further said Revenue Regulation 17-2012, which is the implementing rules and regulations (IRR) of the “sin” tax law, violates the uniformity of taxation rule. The DSAP expressed worry that the implementation of RA 10351 would be damaging to the industry as companies “might be forced to reduce or worse, to cease their manufacturing operations in the Philippines.” It also argued that the sale of alcoholic beverages is “a property right.”
But the court denied the temporary restraining order petition, saying “the taxpayers’ property right should take a step back to the State’s paramount need to generate funds to sustain its functions.” It also affirmed the government’s position that no court is authorized to restrain the collection of taxes as provided under Sec. 218 of the National Internal Revenue Code (NIRC).
Of the P33.96 billion total revenues expected for the first year of implementation of RA 10351, P23.4 billion will come from cigarettes, P6.06 billion from distilled spirits and P4.5 billion from fermented liquors. To prevent the excise tax from being eroded by inflation, it will be increased by four percent every year effective 2016 for distilled spirits and 2018 for cigarettes and beer.
Proponents of the sin tax law have stressed the new excise tax for cigarettes adheres to the country’s commitment to the World Health Organization to raise the ratio of tax to price from the current 29.1 percent to 52.5 percent in 2013 and 63 percent by 2017.
The law allocates 80 percent of the incremental revenues, after deducting the support for farmers, for the government’s Universal Health Care Program and the remaining 20 percent for medical assistance and health enhancement facilities program.