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Budget impasse looms anew; Speaker to oppose Senate’s Train

 

By Gerry Baldo and Angie M. Rosales

Apparently there is no end as yet to the deadlock on the 2018 budget as Speaker Pantaleon Alvarez yesterday said the lower chamber will stand firm against the additional excise tax on coal, fuel and sugar-sweetened beverages as embodied in the tax reform package version of the Senate.
The House chief was particular about the alleged huge tax on coal which, in the end would affect all electric consumers in the country.
The Senate last approved a 3,000-percent increase in coal taxes to as much as P300 per metric ton in 2020 from P10 per metric ton, the rate in effect since the 1970s.
No such tax is included in the House version of Tax Reform for Acceleration and Inclusion Act (Train).
“We are not going to agree to that, definitely not,” said Alvarez, referring to the proposed higher tax on coal.

“When electricity goes up, all prices of goods and services would be going up,” he said in a radio interview.
The coal tax is among the contentious issues in the ongoing deliberations of the bicameral conference committee to harmonize the two versions of the bills.
Alvarez also noted that the Senate insertion of the tax coal tax in the Train contradicts the constitutional mandate that all revenue measures must originate exclusively from the House of Representatives.
“The Constitution clearly gives the House of Representatives exclusive jurisdiction,” he stressed.
“The Senate can only propose amendments... if we agree. If we don’t, then nothing will happen,” the Speaker stressed.
Sen. Juan Edgardo Angara, chairman of the Senate ways and means committee, for his part, admitted that the concluding bicameral conference committee meeting could prove to be crucial as they deliberate on the last few matters which happen to be most contentious issues.
“Yes it’s crucial that we agree on the last few matters,” he said, referring to the issue on taxes on coal, mining and cosmetic procedures and surgeries.
“We’re almost 80 percent to 90 percent complete,” he said.
Angara is hoping that they could reach a compromise when they resume the bicameral meeting today to enable him to present to the floor for ratification of the final version, just in time for Congress’ Christmas break next week.
“Hopefully, that’s the aim,” he said.
“Senate and House have to agree if there is to be any Train bill enacted into law,” Angara added.
During Wednesday’s bicameral meeting, lawmakers also agreed to increase the tax exemption cap of the 13th month pay and other bonuses to P90,000.
The Senate version of the TRAIN proposed a P82,000 tax-free cap while the approved version of the House of Representatives pegged it at P100,000.
Under current law or Republic Act 10653, the 13th month pay and other benefits, including productivity incentives and Christmas bonuses, are exempted from tax if they do not exceed P82,000.
Before RA 10653 was signed into law in 2015, only bonuses not exceeding P30,000 were tax-exempt.
As a compromise, members of the bicameral conference committee, who are tasked to reconcile the differences of the two versions, have agreed to raise the tax-exempt ceiling to P90,000 effective starting 2018.
Bicam members have also agreed to exempt P250,000 annual taxable income of all individual income taxpayers.
Meanwhile, Angelo Palmones of the Alyansa ng mga Grupong Haligi ng Agham at Teknolohiya para sa Mamamayan (Agham) said the proposal, imposing a nearly 3,000 percent hike in taxes on coal is excessive.
He noted that the proposed additional taxes on coal appears to be imposed as an environmental measure to prevent coal from being used as a fossil fuel by generating, manufacturing and other large plants that require efficient and stable source of heat to produce an end-product.
“In order to be a valid environmental measure, it should not be grossly discriminatory and excessive in nature. Otherwise, while we also support the reduction of the effects of greenhouse gases to alleviate climate change, the drastic increase in the excise tax on coal will gravely affect consumers – both industrial and manufacturing industries, whose competitiveness in the global market may be curtailed, as well as end-users who will ultimately shoulder this tax measure’s impact of increased prices for basic commodities – possibly even worse than the benefits our nation stands to gain by the proposed tax measure,” Palmones explained.
He urged the bicameral conference committee to conduct further research and verify the economic impact of the proposed tax reform before the proposed Train tax reform is passed.
Palmones insisted that the imposition of drastic increase in taxes should be fair and equitable to the taxpayers.
He warned that a spike in power rates in the country, the highest in Southeast Asia and third in the entire Asia, would have dire effects on the consumers.
In a two-page position paper submitted before the House committee on appropriations chaired by Davao City Rep. Karlo Nograles, Palmones lamented the provision inserted by the Senate.
“The price of electricity affects all persons in every household and every business. Aside from being a basic necessity, affordable electricity is an important key to national development, economic growth and social progress. Additionally, all the members of Agham are consumers of electricity and will be directly affected financially by the passage of Senate Bill 1592 and House Bill 5636,” Palmones said.
Higher taxes on coal are expected to generate as much as P130 billion in fresh revenues.
The Senate proposal provides for an increase in the coal excise tax from P10 per metric ton to P100 per metric ton on the first year, P200 in the second year and P300 in the third and succeeding years.
While Train is intended to be a revenue acceleration measure, Palmones said it is actually replete with taxation rates and provisions that seem to be surreptitious insertions without proper and legal basis.

 

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