By Marichu A. Villanueva
The Philippine Star
The Philippine Star
On top of the allocations in the Congress-approved 2013 budget, senators and House members will have billions of pesos in additional pork barrel funds that they can access starting Jan. 1 when the new sin tax law takes effect.
How did this came about? It was a product of the usual horse-trading behind a closed-door bicameral (bicam) conference committee meeting among senators and congressmen. And apparently, everybody was happy as it did not take long for the bicam to come up with the final consolidated sin tax bill that President Benigno “Noy” Aquino III signed into law last Dec. 19.
In the specific case of the new sin tax law, the bicam was steered by Sen. Franklin Drilon as chairman of the Senate ways and means committee and co-chaired by Davao City Rep. Isidro Ungab. Both lawmakers belong to the ruling administration bloc in Congress from P-Noy’s Liberal Party (LP).
Before approving the final version of the sin tax bill two weeks ago, the bicam inserted in the reconciled version a new provision allocating a large part of additional revenues from higher taxes on tobacco and alcohol products to congressional districts nationwide. The new provision was carried in the new sin tax law under Republic Act (RA) 10351.
That is why the bicam is pejoratively referred to as the “third congress” for coming out with insertion, or insertions, of new provisions that are sometimes neither in the original Senate nor House version. I gathered that this “rider” in the new sin tax law originated from the House panel in the bicam.
In the end of reconciling differing versions of the Senate and House bills, the consolidated legislation produced at the bicam gets ratified by both chambers and eventually signed into law by the President. Ironically, the original versions of the Senate and House are separately approved in open and public deliberations.
The existing rates have been frozen for more than 16 years until P-Noy signed RA 10351 two weeks ago.
According to the principal authors and sponsors of the new sin tax law, they estimated at least P34 billion in additional revenues would be collected from higher tobacco and alcohol taxes in its first year of implementation.
The higher tax rates in 2013 will only take effect after the government comes out with the implementing rules and regulations (IRR) for RA 10351. That is, if Bureau of Internal Revenue (BIR) Commissioner Kim Henares makes good her public declaration that her agency will be able to come out with the IRR and publish this today, the last day of 2012.
The tax rates will gradually increase by four percent annually from 2013 to 2016, before a unitary amount is slapped on both low- and high-end products effective Jan. 1, 2017.
As computed by our veteran STAR reporter in Congress Jess Diaz, as much as P5.78 billion out of the additional revenues from the new sin tax law would be allocated every year among “political and district subdivisions for medical assistance and health enhancement facilities programs.”
Here’s how the computations for the new provision on the sin tax “pork” were arrived at.
The inserted provision in the new sin tax law states: “After deducting the allocations under Republic Act Nos. 8240 and 7171, 80 percent of the remaining balance of the incremental revenue shall be allocated for universal health care under the national health insurance program, the attainment of the Millennium Development Goals (MDGs) and health awareness programs; and 20 percent shall be allocated nationwide, based on political and district subdivisions, for medical assistance and health enhancement facilities, the annual requirements of which shall be determined by the Department of Health.”
RA 7171, entitled “An Act to promote the development of the farmers in the Virginia-tobacco producing provinces” and enacted on Jan. 9, 1992, allocates 15 percent of all revenues from cigarettes using Virginia tobacco to provinces producing such leaf raw material.
On the other hand, RA 8240 enacted on Nov. 22, 1996, amended certain provisions of the National Internal Revenue Code and mandated small adjustments in the tax rates on tobacco and alcohol products.
Under RA 8240, 15 percent of total collections from the small adjustments are allocated to tobacco-producing provinces. Of that amount, 15 percent or P5.1 billion would be set aside for programs that would benefit tobacco farmers. Of the remaining P28.9 billion, 80 percent or P23.12 billion would go to the state-owned Philippine Health Insurance Corp., the attainment of MDGs and health awareness programs.
Under the new sin tax law, the balance of 20 percent, or P5.78 billion, would be allocated among “political and district subdivisions for medical assistance and health enhancement facilities program.” So far, no one has come out to dispute these computations.
Since the sin tax rates will increase by four percent every year over the next four years, this means the P5.78 billion in sin tax “pork” would also increase by that much over the same period. Thus, incumbent lawmakers and the succeeding ones could access these public funds from the sin tax “pork” for medical assistance for their constituents and for the improvement of state hospitals and other health facilities in their districts.
Understandably, House members and senators allot a large part of their annual funds for medical assistance, giving the money to government hospitals where they refer constituents needing medical attention.
The intentions are obviously well meaning. What makes the earmarking of these public funds dubious is that many of the recipients are the so-called “epal” lawmakers. “Epal” refers to lawmakers whose faces and names appear in billboards, streamers and tarpaulins, claiming that such and such project came from their own funds.
Clearly, the sin tax “pork,” like the rest of the national budget of the government, comes from the taxpayers themselves. In this case, smokers who can’t kick the habit and alcohol consumers, whether they drink socially or are alcoholics.
Indeed, it’s good tidings for lawmakers when the P2.006-trillion budget of the government takes effect at the same time as the sin tax “pork” in the first day of 2013.
Here’s to a happy new year!
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