Finance still optimistic on incentives bill’s OK

FEARS THAT the fiscal incentives bill could be shelved were downplayed yesterday by a Cabinet official, who said legislators still had time to pass the priority measure before turning their focus to next year’s elections.

“[W]e continue to work on the fiscal incentives bill. We have enough time. We have until March 2013 to pass the measure,” Finance Secretary Cesar V. Purisima said at the sidelines of a Senate committee hearing.

Mr. Purisima was responding to reports earlier this week that quoted Trade Secretary Gregory L. Domingo as saying the bill’s passage was unlikely. He cited the lack of time with Congress busy with two other priorities: the “sin” tax and reproductive health bills.

The 15th Congress is currently on its third and final session, which ends next June. Few bills are expected to be passed in the tailend of the period as legislators shift their focus to the elections in May. Tax bills, in particular, are not expected to prosper as they are viewed as a threat to winning an electoral race.

The Aquino administration — which has tagged the fiscal incentives and “sin” tax bills as particularly needed to boost revenues — is keen on finishing proceedings at the soonest possible time as any measure that isn’t signed into law by the end of the 15th Congress will have to go back to square one in the 16th.

Versions of the “sin” tax and fiscal incentives bills have already been passed by the House of Representatives. At the Senate, however, both remain at the committee level.

House Bill (HB) 4935 — also known as the proposed Investment and Incentives Code of the Philippines — was passed on third and final reading in August last year. It moves to harmonize numerous laws that grant fiscal perks, such as the Omnibus Investments Code, special laws for economic zones and other statutes.

A delay at the Senate has stretched as the Finance and Trade departments remain at loggerheads over the Executive version of the measure. The former hopes to streamline the tax breaks and shore up revenues, while the latter wants to maintain the country’s competitiveness as an investment destination.

Mr. Purisima said he would meet Mr. Domingo next month as the two departments move to draft a bill. Details of any concessions are unclear, though.

One idea earlier floated by the Finance chief is to issue subsidies instead of tax breaks so the government can control the amount of money it allocates to priority industries.

The Senate ways and means committee, meanwhile, yesterday ended hearings on the “sin” tax bill with an initial recommendation to combine laws that earmark tobacco tax proceeds. Tiering and rates, meanwhile, still have to be finalized.

“There’s common interest harmonizing” three laws that provide a share of tax proceeds to farmers of Virginia tobacco, growers of native and burley tobacco, and state health insurance and disease prevention programs, committee chairman Senator Ralph G. Recto said.

Mr. Recto said he would finalize rates and tiering recommendations in a report that will be submitted on Oct. 8. Congress will be on recess from Sept. 22 to Oct. 7.

The counterpart HB 5727 was passed in June. Both measures aim to restructure excise taxes on “sin” products in a bid to raise revenues and discourage smoking and drinking. –DIANE CLAIRE J. JIAO, Senior Reporter with K. M. P. Tubadeza, Businessworld