Lacson: Rody veto of TRAIN provisions ‘right, just’

It was “right and just” for President Duterte to veto certain provisions in the the Tax Reform for Acceleration and Inclusion (TRAIN), but he should have vetoed more line items, Sen. Panfilo Lacson said yesterday.

Lacson cited the President’s veto of the provision providing zero-rating on the sales of goods and services of separate customs territories and tourism enterprise zones, as such provisions go against the principle of limiting the valueadded tax (VAT) zero rating to direct exporters.

“The proliferation of separate customs territories, which include buildings, creates significant leakages in our tax system. This makes the tax system highly inequitable and significantly reduces the revenues that could be better used for the poor,” the President stated in his veto message for the TRAIN bill.

Lacson noted that limiting zero rating to direct exporters was his first individual amendment for the TRAIN bill “that was outvoted due to what we call conflict of interest.”

“Hurrah! I thought it was right and just for PRRD (President Duterte) to veto some TRAIN provisions. I wish he had vetoed more line items,” Lacson said.

Sen. Loren Legarda, who was part of the Senate contingent in the bicameral conference committee meetings for the TRAIN bill, said that she generally agreed with the veto power of the President and his decision to remove some provisions of the TRAIN.

However, she maintained her position that there should be no tax exemption for local coal which she said has enjoyed a tax-free status for 42 years already.

The Senate contingent wanted to impose a P300 per metric ton tax on coal, up from the current P10 per metric ton.

Under the Senate’s version, there was no distinction between local or imported coal – both subject to P300 per ton tax.

The contingent from the House of Representatives rejected this and insisted on retaining the tax exempt status of local coal.

Many senators argued that local coal should not be exempted, especially since there is only one firm that is engaged in coal mining in the country.

Health advocacy groups also welcomed President Duterte’s veto of a provision in the TRAIN that earmarked incremental revenues from tobacco taxes for tobacco productivity programs.

But in separate interviews, officials of the Southeast Asia Tobacco Control Alliance (SEATCA) and Framework Convention on Tobacco Control Alliance Philippines (FCAP) said it would have been better had the TRAIN provided for higher taxes on tobacco products.

“The President was correct to veto the additional earmarking of the tobacco excise incremental revenues, because the amount going to universal health care would have been reduced,” said Ulysses Dorotheo, SEATCA program director for Framework Convention on Tobacco Control (FCTC).

Dorotheo maintained that if the earmarking had been approved, “more funds would

go to the tobacco-growing provinces instead of to public health.”

According to FCAP executive director Maricar Limpin, Duterte made the veto as “he does not want to compromise the funding to health.”

Limpin added such line veto on tobacco tax earmarking is “a strong indication that the President and this administration, despite the strong tobacco industry lobby, will ensure the continued allocation of 85 percent of the incremental revenue of tobacco taxes to universal health care.”

“This can be considered a gift of the President to the Filipino people. However, it would have been a greater Christmas gift if the tobacco tax was increased to P60 from the current tax rate of P30 instead of a mere P2.50 increased in the TRAIN,” she said.

She maintained the incremental revenue of P4 billion from the P 2.50 increase in tobacco tax is “a valuable addition to the health budget.”

“However, the P2.50 increase is still not enough to deter 200,000 new smokers, particularly the young and the poor, from starting this smoking addiction in 2018,” Limpin added.