Manila, Philippines-The amended bill reforming sin taxes fails to address concerns raised by the World Trade Organization (WTO) over Manila’s taxes on liquor, according to the European Chamber of Commerce of the Philippines.

"The ECCP is extremely disappointed with the amendments to the excise tax reform bill HB 5727 on distilled spirits and we urgently request the bill be revised to its original proposal," Henry Schumacher, the chamber’s vice president for external affairs said in a statement.

The House Committee on Ways on Means last week reported out an amended House Bill N. 5727. Among the amendments is the shift to a three-tier tax rate for liquor.

"The overwhelming number of products that will fall under the lowest tax tier is local and the overwhelming number of products falling at the higher tax tiers is imported. The three-tiers for alcohol means that in practice, imported products will continue to be taxed higher than local products, maintaining the long standing discrimination and violation of WTO principles," Schumacher said. 

To recall, the European Union and the US secured a favorable WTO ruling that rendered Philippine taxes on imported liquor unfair.

Besides its failure to comply with the WTO ruling, the amended HB 5727 provides a multi-rate tax structure based on net-retail classification – a scheme that complicates tax administration and goes against the principle of transparency, the ECCP said.

The group also said the amended bill will distort responsible drinking decisions, as consumers shift to products that are lower-taxed regardless of the alcohol content.

The ECCP is appealing to the House Ways and Means Committee to reconsider HB 5727 by adopting a single specific rate for liquor products, which is what the WTO considers as non-discriminatory, simple and transparent.

"The ECCP has made it clear before that it welcomes a simplified specific rate structure for beverage alcohol as it supports responsible drinking decisions to be made as the tax is based on the level of alcohol content in the product rather than on price, quality, or origin," Schumacher said.

Source: Interaksyon; News; 21 May 2012