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CONGRESS
wants to amend a four-year-old law imposing a
complicated excise system on alcohol products to make it
simpler and sensitive to inflation.
“One of
the limitations of the present system is the failure of
the specific tax system to automatically capture changes
in the net retail price of alcohol products,” the
proponent, Rep. Danilo Suarez, said of House Bill 3787.
The bill
seeks to amend Republic Act (RA) 9334 that became law in
December 2004, increasing the rates at which alcohol and
tobacco products were to be taxed.
RA 9334
allowed for the automatic lifting of the excise rates
every two years but only up to 2011, beyond which rates
would freeze again.
“After
2011, legislation of new rates would again be necessary
to reflect current levels,” Suarez said.
The
current excise system “contributes to stunted growth in
excise-tax collection” owing to the inability of the
Bureau of Internal Revenue (BIR) to automatically
reclassify the base at which alcohol products were
taxed, according to Suarez.
He said
many alcohol products now sell at very much inflated
prices but are still levied outdated tax rates, as these
were “vested with ‘legislative protection.’”
Suarez
said this was a privilege granted by an act of Congress
that must now also be revised by a similar act if the
revenue stream going forward were to attain significant
improvement.
Excise
tax accounts for roughly 65 percent of all taxes
collected by the BIR.
Suarez
also said the current multitier excise-rate system makes
for weakened and complicated implementation that
subjects collection to loopholes—gaps that manufacturers
exploit to full advantage.
He aims
to remove the weaknesses of the current law and replace
it with a unified system that is also tied to inflation
so that collection continues to move up no matter which
way inflation was moving.
Under
the current excise-tax regime, alcohol excise collection
diminishes even though its price moves up because the
rate is not linked or related to inflation.
“Similar
products will be imposed a single automatic-adjustment
mechanism that will prevent the value of excise taxes
from being eroded by inflation,” Suarez said of his
proposal. |
