Finance Secretary Cesar Purisima, in a meeting with senators yesterday, agreed to scale down from P60 billion to P40 billion the revenue target from the Palace-endorsed “sin” tax bill imposing higher excise taxes on all cigarette brands and alcoholic drinks, a senator privy to the caucus said.

In a separate interview, Sen. Ralph Recto, who earlier resigned as chairman of the Committee on Ways and Means amid sin-tax lobby-fund charges by Palace officials, confirmed that Purisima also apologized for the unfounded allegations.

He said he wanted to have a “good working relationship” with the Malacañang.

It would now be up to the vice chairman, Sen. Frank Drilon, to produce a new committee report adjusting the revenue target closer to the original P60-billion tax take proposed by the Department of Finance. Recto earlier submitted a committee report endorsing a much lower P20-billion incremental revenue from adjusted excise taxes of alcohol and tobacco products.

“The sentiments were expressed [at the caucus] that it would be better that they come out with the highest number, the P60 billion that they were talking about. That was the sentiment of many senators,” he said. “But then, you give the chairman a free hand in drafting a report.”

In response to questions, Recto also said executive officials at the caucus no longer insisted on the P60-billion target and agreed to start from P40 billion.

Recto also said the ways and means committee’s version of the sin-tax bill raising excise taxes on both imported and local tobacco and alcohol products substantially complied with World Trade Organization rules.

“I think it is [already] compliant with WTO,” said Recto, who resigned as chairman of the committee after being criticized by Palace officials for endorsing a much-lower P20-billion incremental revenue than the P60-billion revenue target proposed by the Department of Finance.

Recto was reacting to reports quoting European Chamber of Commerce of the Philippines Vice President Henry Schumacher warning that failure to comply with a WTO ruling on Philippine liquor taxes may adversely affect trade and investment ties with the European Union.

“Naturally, foreign businessmen would want lower taxes for their products,” the senator said but added that imposing the same tax rates on high-end imported alcoholic drinks like Hennessey and Dom Perignon, for instance, and locally distilled brandy, gin and rum brands would kill the local industry and displace thousands of workers.

Source: Business Mirror; Front Page; 18 October 2012