In a subtle rebuke of the Lower House, the Senate leadership has practically frozen further action on the House bill prescribing a return to two-tier rates on cigarettes by ordering its two major Senate committees to undertake a review of the current “sin” tax law before any amendments are considered.
Senate President Aquilino “Koko” Pimentel, Majority Leader Sen. Franklin M. Drilon, Minority Leader Sen. Ralph G. Recto and Sen. Risa Hontiveros-Baraquel said the Senate Ways and Means Committee, chaired by Sen. Juan Edgardo Angara, and the Senate health panel of Hontiveros-Baraquel should review Republic Act (RA) 10351 to determine if the goals of reducing consumption of sin products have been achieved.
The four Senate leaders jointly filed Senate Resolution 279 directing a legislative review on the law’s impact on consumption of alcohol and cigarettes and how much revenues were also generated for the government.
The review will also look into the effectiveness of the unitary-tax rate in further reducing alcohol and cigarette consumption. This could mean a long-drawn Senate review since the committees have to wait for at least a full year before it could render verdict on the superiority of the unitary tax rate, which just took effect in January this year.
“Whereas, there is a need to conduct an assessment, specifically on the health impact of the present law and on the effectiveness of a unitary-tax system before any amendment is to be introduced,” the senators said in the Senate Resolution filed on January 25.
“Whereas, the review is timely and necessary considering that it has been five years since the passage of RA 10351,” the Senate leaders added.
Drilon and Recto are considered to be “fathers” of the current sin-tax law and have vigorously pushed for a unitary tax regime after a four-year transition from a two-tier rates.
The Senate leaders, likewise, noted that a legislative review is mandated under Section 11 of RA 10351 through the Congressional Oversight Committee on the Comprehensive Tax Reform Package (COCCTRP), chaired by the ways and means committees of both houses.
Under the time frame provided by the law, the review should have been conducted in the third quarter of 2016. The law was passed in 2012 and implemented in 2013.
The Angara panel has independently commenced review of the law as early as September last year but still awaits the constitution of the House panel to formally convene the joint oversight committee.
The Senate has recently notified the Department of Finance (DOF) of the ongoing assessment of the law’s implementation.
The House of Representatives, instead of joining the sin-tax law review, passed before Christmas House Bill 4144 prescribing a return to two-tier tax rates for cigarettes to replace the unitary rate that was only implemented this year.
The proposed measure excludes the alcohol industry.
Angara earlier said his committee does not see any urgency in acting on the House measure and would prioritize the tax-reform package of the new government, such as lowering the individual income tax.