S&R pushes sin tax, fiscal incentives bills
Global debt watcher Standard & Poor’s is pushing for the passage of the sin tax and fiscal incentives measures, deemed crucial in making the country’s revenue stream sustainable, the Bureau of Internal Revenue (BIR) said yesterday.
An S&P review team is currently in the country as part of its regular assessment on the country’s fiscal and monetary environments and overall economic fundamentals. The team met with BIR Commissioner Kim Henares regarding gains made in tax administration and revenue enhancement.
Henares said that during their meeting, the S&P team called for the passage of the two revenue measures by June 30.
The timely passage of the two measures would boost the country’s chance of securing a credit rating upgrade.
However, the global debt watcher is expected to release the results of the review by May which may be too soon for the two measures to have hurdled Congressional debates.
The sin tax measure currently pushed by the Aquino administration is House Bill 5757, authored by Cavite Rep. Joseph Emilio Abaya. The measure, currently pending at the House Ways and Means Committee, calls for the adoption of a unitary tax system for tobacco and liquor and indexation of taxes to inflation.
The measure is estimated to yield an additional P60 billion in fresh revenues from cigarettes and tobacco products.
The World Bank is also pushing for the passage of the Abaya measure. A study made by the multilateral lender estimates that we could gain as much as 1.3 percent of gross domestic product (GDP) in additional revenues from reforms in the sin taxes like uniform tax rates and indexation.
The Finance department, together with the Department of Trade and Industry, has been pushing for a fiscal incentives bill. The department said the measure would “strike a balance between the country’s need to attract investments but at the same time minimizing the agency’s revenue losses.”
The Aquino administration wants to stop giving out income tax holiday to investors, saying that such tax perks leave a dent on revenues.
Last year, S&P raised upgraded its outlook for the Philippines to positive from stable.
Finance Secretary Cesar Purisima met with rating agency officials in London in February. He has repeatedly said that the country deserves a better credit rating.