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By Melissa Luz T. Lopez, Reporter

House body rushes mining, soda tax bills

Posted on October 21, 2015

WITH LESS than four months of congressional session left before the May 2016 national elections -- and legislative leaders already straining to muster the quorum needed for final approval of bills -- the Ways and Means committee of the House of Representatives plans to zero in on two measures it hopes would plug billions of pesos in forgone revenues estimated from a proposal to cut income taxes.

Soft drinks and energy drinks are on display at a supermarket. Photo via Wikimedia Commons
Upon resumption of session on Nov. 3, Marikina Rep. Romero Federico S. Quimbo (2nd district), who heads the committee, said his panel will take up a measure seeking to raise the prices of softdrinks by as much as P10 per liter, alongside three bills proposing a new mining fiscal regime.

“That (mining bill) and the soda tax will be the main bills for the session after the break,” Mr. Quimbo said in a text message.

The proposal to increase duties on sugar-sweetened drinks is being considered by the committee as both a health and as a revenue measure. Speaker Feliciano R. Belmonte, Jr. said separately that he agrees to the proposal for “health reasons.”

A draft prepared by a technical working group since June seeks to raise the price of sodas by P10 per liter in a bid to discourage consumption of such products that are deemed “unhealthy.” This is based on an initial proposal filed by Nueva Ecija Rep. Estrellita B. Suansing (1st district) that sought to impose an additional 10% ad valorem tax on the sugar-sweetened beverages.

Ms. Suansing said the additional P10 per liter was based on studies cited by the World Health Organization showing that raising prices by 20% would reduce consumption by 24%.

The extra levy on the sugar-based drinks will be on top of the 12% value-added tax already imposed on consumer goods.

It is envisioned to take effect in 2016 and will be hiked by 4% “every year thereafter starting Jan. 1, 2017,” according to the draft.

The proposed additional tax will cover soft drinks, soda and soda pop, fruit drinks and punch, sports drinks, sweetened tea, coffee drinks, energy drinks and all non-alcoholic ready-to-drink beverages.

Exempted are 100% fresh fruit juices, yogurt, as well as milk and milk substitutes.

Bottling companies and sugar producers have opposed the bill, arguing that their industries are being “unduly targeted,” which in turn could discourage investments.

The Sugar Regulatory Administration has also expressed concern over the proposal, saying it could negatively affect local sugarcane farmers.

Ms. Suansing has said that the new soda tax could raise an additional P34.4 billion that could offset a similar amount in forgone revenues expected in the first year of implementation of another bill -- favored by both chambers of Congress, as well as by both business and labor sectors, but towards which Malacañang has been cautious -- that will cut income taxes for both individuals and companies by adjusting them to inflation. Income taxes were last adjusted in 1997.

The proposal for a new mining fiscal regime, meanwhile, remains pending before the committee in the face of opposition from large-scale miners and big business groups.

There are three versions of the proposed new mining revenue-sharing scheme, one of which was drafted by the Mining Industry Coordinating Council (MICC) and submitted to Congress in February.

The MICC version, filed as House Bill (HB) No. 5367, will collect either 10% of a miner’s gross revenues or 55% of “adjusted net mining revenues” (ANMR: gross revenue less production and other deductible costs but not to exceed 10% of direct mining, milling and processing costs), whichever is higher; and 60% of any windfall profit (in case the “ANMR margin” -- ANMR divided by gross revenue -- exceeds 50%, the government gets 55% of that threshold of 50% of gross revenue plus 60% of the excess).

While this is in lieu of several taxes, miners must still pay value-added tax, capital gains tax, stock transaction tax, documentary stamp tax, withholding tax on passive income, donor’s tax, environmental fee, real property tax, Securities and Exchange Commission fee, water usage fee, as well as administrative and judicial costs and penalties.

Mr. Quimbo said the committee hopes to approve the two measures before Congress takes its Dec. 19-Jan. 18 Christmas and New Year break. Subsequent session runs from Jan. 19 to Feb. 5.

As a rule, all tax measures must emanate from the House.