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Unlocking opportunities at Investagrams Traders’ Summit

Following sold-out events in the Philippines and Singapore, Investagrams ends the year with Traders’ Summit 2018, one of the largest stock market events in the country.
The one-day event, which will take place on Dec. 8, 2018 at Samsung Hall, SM Aura, Taguig, will bring together local and global traders and investment professionals to discuss the right tools to building a successful career in trading.
Stock market enthusiasts can expect first-hand intelligence on the market plays, trading strategies, and capitalization and portfolio diversification schemes through talks, panel discussions, interactive event set-ups, and valuable networking opportunities.
The event’s morning program provides an overview on best trading methods, with firsthand experiences on discovering and deploying the right risk management philosophy for consistent, profitable trades in the Philippine Stock Index and Forex Market. Speakers for this module include:

The afternoon program shifts focus to cutting edge trading strategies designed to get you ahead of the market through technical and fundamental insights from global experts including:

“As you trade the higher levels, you have to use higher level strategies,” said Investagrams’ CEO and Co-Founder JC Bisnar. And attendees of Traders’ Summit 2018 can expect to learn precisely those strategies — embracing advanced methodologies and building a diversified portfolio capable of withstanding market volatility, solidifying one’s success.
Traders’ Summit 2018 is organized by Investagrams, the nation’s leading non-brokerage stock market platform. With over 270,000 users to date, Investagrams provides Filipinos with the tools and education needed to start their journeys into trading the stock market.
You can find discounted tickets to Investagrams Traders’ Summit 2018 here.

Local factories ramp up production in October: PSA

By Christine Joyce S. Castañeda
Philippine factories ramped up production in October, the Philippine Statistics Authority (PSA) reported this morning.
Preliminary results of the PSA’s Monthly Integrated Survey of Selected Industries (MISSI) showed that in October, factory output – as measured by the Volume of Production Index (VoPI) – grew 3.7% year-on-year.
This was slower than the revised 4.2% growth recorded in September but was a reversal from the 6.6% contraction a year earlier.
“Among the 13 major industry groups that reported increases in VoPI, eight major industries recorded two-digit growths, namely: textiles (41.9%), miscellaneous manufactures (31.2%), petroleum products (30.8%), machinery except electrical (17.6%), wood and wood products (17.1%), electrical machinery (16.9%), non-metallic mineral products (11.9%), and paper and paper products (10.7%),” the PSA said.
Average capacity utilization — the extent by which industry resources are being used in the production of goods — was estimated at 84.3%. 11 of the 20 sectors registered capacity utilization rates of 80% and above.

It’s a go for fuel excise tax hike

A FRESH INCREASE in fuel excise tax will proceed as scheduled next month after President Rodrigo R. Duterte approved in a Cabinet meeting on Tuesday night his economic managers’ recommendation to scrap his order barely four weeks ago to suspend the hike, the chief executive’s spokesman said.
“The President has approved the recommendation of the Development Budget Coordination Committee (DBCC) to proceed with the implementation of the second tranche of excise tax on fuel, effective January 2019,” Presidential Spokesperson Salvador S. Panelo said in a mobile phone message on Tuesday night when asked for updates as the meeting was under way.
“Due consideration was given to several factors including, but not limited to: the downward impact on inflation owing to the steep drop in the Dubai crude oil price, the disruption in the BBB (‘Build Build Build’) infrastructure program and reduction in budgets, including personnel services of national government agencies, should excise tax on fuel be suspended,” Mr. Panelo explained.
“Under the TRAIN law, suspension of excise taxes is provided for only when the global price of oil averages $80 per barrel (/bbl) or higher for three consecutive months. The current oil price has gone down to $52-53 per barrel, hence, the legal requirement for the suspension of excise tax on fuel cannot be met,” he added, referring to Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Act (TRAIN) that took effect last January.
TRAIN, among other major adjustments to the local tax structure, imposed a P6 per liter fuel tax spread out through three years, with the first tranche of P2.50/liter imposed last January, a P2/liter increase set in 2019 and P1.5/liter for 2020.
Dubai crude price — Asia’s benchmark — breached $80/bbl from Sept. 26 to Oct. 12, prompting economic managers to recommend suspension of the scheduled fuel tax hike to Mr. Duterte on Oct. 11. They were notified of the President’s approval of their recommendation on Nov. 8.
But that price has been falling since, hitting $58.25/bbl, $59.06/bbl, $61.20/bbl and $61.50/bbl on November 29 and 30, as well as Dec. 3 and 4, respectively, prompting the DBCC members to decide in a Nov. 29 meeting to recommend that the fuel tax hike proceed as scheduled.
Economic managers had also earlier flagged that suspension of the scheduled tax hike would deprive the government of an estimated P43.4 billion in foregone revenues.
MAKING THE CASE
Earlier in the day, the Department of Energy (DoE) said it expected world crude prices to be at the ” low $50s” per barrel next year, prompting the agency to support state economic managers’ proposal last week to scrap Malacañang’s decision to suspend an excise tax hike on fuel that was scheduled for next month.
“We are seeing the Dubai crude oil at around the low $50s in the coming months,” Energy Secretary Alfonso G. Cusi told reporters on the sidelines of the Energy Investment Forum 2018 at the Shangri-La at the Fort in Taguig City on Tuesday.
“We have submitted our position already. We submitted our forecast and it shows there that the forecast will be somewhere in the low $50 and that supports the recommendation of the DBM (Department of Budget and Management) and the DoF (Department of Finance) to reinstate the excise tax [hike] because… we really need to build our infrastructure and we need the fund, we need the money,” he added.
Mr. Cusi said other developments in the international oil market could also result in more supply. He said news that Qatar would be leaving the Organization of the Petroleum Exporting Countries (OPEC) could mean the Middle Eastern country would be acting independently.
“Hopefully, that would increase their production and increase in the supply in the world market,” he added.
“The law of supply and demand: if there will be more supply then the price will go down.”
Mr. Cusi also downplayed the threat of a production cutback by OPEC major Saudi Arabia and Russia.
“As of now, the forecast is, something like, the world supply is something like 100 million barrels a day and the demand is somewhere at the low 90s, 98-99 [million barrels]. So there is that buffer and it is projected that the US will be increasing its production,” he said.
“So if the US will be able to cover for the reduction in the production of Saudi and Russia, then we’re okay,” he added.
“Next week, we’re going to see hopefully another rollback.”
This week, oil companies cut the prices of petroleum products by P2.00 per liter for gasoline, P2.10 per liter for diesel and P2.00 per liter for kerosene. This week’s reduction is the eighth straight week of price cut for local oil companies at amounts mostly higher than P1.00-P2.00 per liter. — Arjay L. Balinbin with Victor V. Saulon

Government dismantling REIT hurdles

By Elijah Joseph C. Tubayan
Reporter
GOVERNMENT MOVES to dismantle the two roadblocks to the establishment of real estate investment trusts (REIT) may finally kick-start their formation.
At a hearing of the House of Representatives Economic Affairs committee on Tuesday, an official of the Securities and Exchange Commission (SEC) agreed to cut REITs’ minimum public ownership (MPO) to 33%, after the Bureau of Internal Revenue (BIR) clarified that initial transfers of property to REITs are exempt from value-added tax (VAT), as provided by Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion (TRAIN) Act.
SEC Assistant Director Emma A. Valencia said that corporate regulators will amend the existing implementing rules and regulations (IRR) of Republic Act No. 9856, or the REIT Act of 2009.
“The position of the SEC is that the commission is really considering lowering the MPO requirement as requested by the proponents, but the condition is we get the confirmation that the transfer of property to a REIT is VAT-exempt under the TRAIN law. Now we heard from the BIR the reply to this request. In that case, if SEC will be formally receiving the letter coming from the BIR, then SEC is already revising its IRR or the circular that increased the MPO level,” she said at the hearing.
The BIR issued Revenue Regulation 13-2018 dated March 15 to implement amended VAT rules under the TRAIN law, which states that “transfer of property pursuant to section 40(C)(2),” are included in VAT-exempt transactions.
A BIR representative read a statement from BIR Commissioner Caesar R. Dulay affirming the interpretation of the TRAIN law, saying that initial property transfers to REITs are VAT-exempt as long as they qualify under Section 40(C)(2) of the 1997 tax code.
“The enumeration of transactions exempt from VAT under Sec. 34 of Republic Act 10963, or the TRAIN law, do not include the transfer of property to a REIT. The only VAT-exempt transaction that can be associated with the transfer of property to a REIT is when the transfer is made pursuant to Section 40(C)(2) pursuant to National Internal Revenue Code, or when property being transferred to a REIT is a capital asset of the transferor. Therefore, the transfer of property classified as ordinary asset to a REIT, unless made pursuant to Section 40(C)(2), is not exempt from VAT under the TRAIN law,” Mr. Dulay’s statement read.
Section 40 (C)(2) states that: “No gain or loss shall… be recognized if property is transferred to a corporation by a person in exchange for stock or unit of participation in such a corporation of which — as a result of such exchange — said person, alone or together with others not exceeding four persons, gains control of said corporation.”
Shareholders’ Association of the Philippines President Francisco Ed. Lim said that the BIR’s interpretation, along with the SEC’s plan to reduce the MPO, will make the REIT law palatable to industry.
“For as long as TRAIN exempts from VAT transfers to property pursuant to 40(C)(2), as far as we’re concerned that’s more than enough. Although we admit that there was no express mention of property transfers to the REIT, in the ordinary course of things, the transfer to a REIT is not pursuant to section 40(C)(2). On that, the BIR and the private sector are in agreement, even with the SEC,” Mr. Lim said in the same hearing.
REITs are listed corporations that own and operate income-generating real estate assets like offices, apartment buildings, hotels, warehouses, shopping centers and highways.
The REIT law was enacted in 2009, but property developers have been lukewarm so far due to extra costs from VAT, and since they would have little control over REITs due to a 40-67% public float under the current IRR.
The REIT law actually stated that one-third of such vehicles should be publicly owned, but the IRR provided by SEC mandated a 40% MPO for the first two years and 67% thereafter. The MPO for REITs is much higher than the minimum 20% for publicly listed companies.
The REIT law did not spell out tax treatment of the initial transfer of real property to REITs, which led to the BIR issuing RR 13-2011 that categorized such property as ordinary assets — those that are used in business or are held for sale or for lease — hence, subject to VAT.
“The IRR have put in what we believe are roadblocks to the success of the launching of the REIT industry in the Philippines. Since we enacted the law in 2009, the global REIT has already grown into trillions. Because of these roadblocks, the Philippines does not have a share in that,” Mr. Lim noted at the hearing.
The Philippine Stock Exchange said it now hopes to see REITs to listed next quarter.
“This is something good for the capital markets, it’s something both local and foreign investors are waiting for. The only things that prevented the launch of the REITs is really the items on the VAT issue and the MPO. From what we hear, we understand that the tax issue has been resolved and that the SEC is willing to reduce the MPO and we think this is really good for the capital markets to have this launched as early as the first quarter next year,” President and Chief Executive Officer Ramon S. Monzon said in the same hearing.
“For those markets with established REITs, the returns are much higher than the dividend yield on equities. A good advantage of REITs is it sustains market activity or trading volume during down market like what the global market is experiencing in 2018,” he added, noting that the Philippines is the only major Southeast Asian market that does not have a REIT industry.

Traffic crisis bill bags final House OK

THE HOUSE of Representatives approved on third and final reading on Monday evening a measure designed to alleviate worsening traffic in three key urban centers in the country.
House Bill No. 6425, or the “Traffic Crisis Act of 2018. Makiisa. Makisama. Magkaisa,” proposed to develop within three years a comprehensive framework to address traffic congestion in Metropolitan Manila, Metropolitan Cebu and Davao City.
House Transportation Committee Chairman Rep. Cesar V. Sarmiento of Catanduanes said the measure will harmonize overlapping traffic rules.
In a chat with reporters after the hearing, Mr. Sarmiento blamed varying traffic rules and regulations among municipalities as one of the key reasons for worsening traffic.
“Dapat magkaroon tayo ng (We should have) unified traffic rules and regulations,” he said.
The bill is among the priority measures identified by the Legislative-Executive Development Advisory Council.
Its counterpart measure, Senate Bill No. 1284, or the “Traffic and Congestion Crisis Act of 2016” that covers only Metro Manila and Metro Cebu awaits second-reading approval.
HB 6425 designates the Secretary of the Department of Transportation as the Traffic Chief, who will wield “full power and authority… to streamline the management of traffic and transportation and to control road use in the identified metropolitan areas,” while he Senate version provides that a “Traffic Crisis Manager” be appointed by the President.
If enacted, HB 6425 will give Transportation Secretary Arthur P. Tugade the “power of supervision and control” over the Metropolitan Manila Development Authority, the Metropolitan Cebu Traffic Coordinating Council and the Davao Traffic Administrator to be formed by the law, the Philippine National Police Highway Patrol Group, the Land Transportation Office, the Land Transportation and Franchising Regulatory Board, the Road Board and “all other executive agencies, bureaus and offices with functions related to land transportation regulation.”
He will also supervise all LGUs (local government units) within the key areas “with respect to enforcement of rules, policies and programs enacted pursuant to this Act and for harmonization and enforcement of all traffic rules and regulations… and establish and implement… a comprehensive and unified road use plan and a unified traffic management system to be followed by all component LGUs…”
The measure will also suspend local governments’ power to issue franchises to public utility vehicle operators and will authorize the Traffic Chief to revoke or revise existing PUV franchises, “in accordance with Section 17, Article XII of the 1987 Constitution” governing “times of national emergency” as well as “take over or direct the operation of any PUV franchise…”
“The power of LGUs in the metropolitan areas to issue franchises to padyak, tricycles and all other PUV units as provided in the Local Government Code is hereby suspended during the effective period of this Act,” Section 17 of the bill read.
Moreover, Section 27 of the House version authorized the President, through the Traffic Chief, to enter into contracts for priority projects for the years that the proposed law will be in effect.
In comparison, Section 5 of the Senate bill provides: “The President is hereby granted Emergency Powers to urgently utilize all necessary government resources, exercise police power, including eminent domain and employ executive actions and measures to ensure effective implementation…” of the proposed law. — Charmaine A. Tadalan

Asian central banks are in for a quieter year in 2019 — analyst

SINGAPORE — For most of Asia’s central banks, things should be a whole lot less exciting next year — and that’s a good thing.
As the US Federal Reserve looks toward topping off its interest-rate hike cycle, even those policy makers in the region who haven’t followed the tightening path should be in position to keep policy steady, according to Deyi Tan, an Asia economist with Morgan Stanley.
“For most of the central banks in Asia, we don’t have very aggressive rate-hike cycles, except for maybe in the Philippines,” she said in an interview in Singapore. “We don’t actually think that central banks really need to keep in tandem with what the Fed does or doesn’t do. Outside of India or Indonesia, we actually have a very shallow rate-hike cycle or no rate hikes at all.”
Morgan Stanley economists are penciling in a weaker dollar next year and US 10-year yields declining to 2.75% — providing less stress on emerging markets that had to worry this year about capital outflows and volatile currencies.
Current accounts that are broadly in good shape and benign inflation risks for much of the region should keep Asian central bankers in a comfortable position, according to the Morgan Stanley economist.
The Indian rupee and Indonesian rupiah bore the brunt of US dollar strength in Asia in 2018, and in turn should be big beneficiaries as dollar strength moderates.
India probably has a bit more tightening to do: Morgan Stanley sees one interest-rate increase in each of the second and third quarters.
After 175 basis points’ worth of increases, Bank Indonesia’s tightening work should be done for now, they estimate.
“For most of the other central banks in Asia, most of them run current-account surpluses so they don’t have this funding squeeze whenever the US dollar strengthens,” Ms. Tan said.
“And macro fundamentals in Asia are generally quite controlled — actually quite favorable.”
Domestic inflation could complicate things, but in most parts of Asia inflation has surprised to the downside, Ms. Tan said.
South Korea has only recently met its two percent inflation target, and the likes of Singapore, Taiwan and Thailand show contained price growth.
The exception to the steady-as-she-goes outlook in Asia: the Philippines.
Ms. Tan sees the problems as more domestic than external in the Philippines, suggesting that an easing in external pressures will not take its struggles away. She sees a significant buildup in debt and credit growth that’s running roughly twice the pace of gross domestic product.
Perhaps most importantly, inflation is still a huge problem. “Even with oil prices falling, the peso appreciating, the reality is that’s not going to resolve all the inflationary pressures that the Philippines is facing,” Ms. Tan said.
A boost to inflation this year from tax changes will fade in early 2019, and legislation around the rice supply should help damp price growth.
But Ms. Tan sees policy makers at Bangko Sentral ng Pilipinas underestimating the durability of faster inflation, particularly as core inflation also has been rising.
Morgan Stanley sees another two increases of 25 basis points each in the first and second quarters.
One X-factor for Asia’s central banks in 2019: They might find more use in macro-prudential tightening that’s more targeted to their specific needs, said Ms. Tan.
“For Asia, maybe macro-prudential tightening is the better way to go about dealing with financial stability risks if policy makers still feel like these risks exist — more so than interest rates,” which are a blunt tool, she said.
South Korea, Singapore and Thailand each have shown success in using a more “pointed” macro-prudential approach to perceived financial instabilities, in Ms. Tan’s view. — Bloomberg

How strong is the Philippines’ brand as a nation?

How strong is the Philippines’ brand as a nation?

SC denies Palawan claim to 40% of Malampaya funds

THE Supreme Court (SC) voted unanimously, 13-0, to reject a claim by Palawan province for 40% of the royalties of the Malampaya natural gas project, according to a Supreme Court source who asked not to be identified.
The source said that the court ruled that the Malampaya field was outside the province’s territory.
The ruling has yet to be officially released.
The case stemmed from a February 2009 petition which questioned the legality and constitutionality of Executive Order (EO) 683-issued by former President and now Speaker Gloria Macapagal-Arroyo in 2007 ordering the release of half of the disputed 40% share of Palawan — claiming that it violates Republic Act No. 7169 or the Local Government Code of 1991 and the Constitution’s guarantee of equitable sharing of wealth.
The petitioners claimed that neither the governor, congressmen, nor the Puerto Princesa mayor is authorized to sign on behalf of the local government units (LGU) in the province as the EO directs the release of the shares to the province and congressional districts of Palawan as well as Puerto Princesa City.
They also argued that the provisional implementation agreement (PIA), which will authorize the release of the shares as stated in the EO, only discussed “net proceeds” but the law stated that the shares of LGUs should be based on “gross collection.”
They claimed that the local government code provides that any proceeds from national government income should be directly released to the LGUs.
The national government, through the Department of Energy, entered a service contract in 1990 with Shell Philippines Exploration B.V. and Occidental Philippines, Inc. for what was thought to be the largest single investment in the country.
The project is expected to raise $8 billion to $10 billion for the government.
The Malampaya gas field is around 80 kilometers from the Palawan coastal.
The Palawan government claims 40% of the proceeds of the project, citing the Local Government Code of 1991.
Ms. Arroyo in 2007 issued EO 683 which directed the release of half of the 40% of the funds to the province and congressional districts of Palawan and Puerto Princesa City through a PIA on condition that the funds are used immediately for development projects in Palawan.
The petitioners questioned the EO in the Court of Appeals but lost in 2008. They then elevated the case to the SC in the following year. — Vann Marlo M. Villegas

Duterte: CoA must resolve project ‘gridlock’

PRESIDENT Rodrigo R. Duterte said the Commission on Audit (CoA) has been causing “gridlock” with the implementation of many key projects, and that he would like to speak with the independent commission’s chairman to get spending and investments flowing again.
“I have to talk to CoA… Either I go to his office or he comes to me here. There are so many things that we cannot understand,” the President said in his remarks during a Christmas tree lighting ceremony at the Palace on Monday.
Mr. Duterte added that “there seems to be gridlock” in the implementation of government projects and even in the flow of investments into the country.
He added that an “improved economy” was his “dream” for the Filipino people. “That’s why I said I have to talk to so many people. CoA causes gridlock,” he said.
“The Philippines is known as a country which does not honor contractual obligations. And yet, CoA, if you are listening now, should be reasonable and sane enough to know that in our Constitution, impairment of the obligation of contracts is not allowed. So instead of rendering an opinion that blocks the project, why don’t you just invent (a solution) if you have to?” the President added.
He also said that the agency should find ways “to allow the investments” to move forward “because we need the money.”
Asked for comment during a briefing at the Palace on Tuesday, Palace Spokesperson Salvador S. Panelo said: “What he means by ‘invent’ is you try to evaluate whether or not your opposition or your auditing is within what the law prescribes. Because you may be misreading the provision of the law.”
As for the specific projects the President was referring to, he said: “I do not know what project he was referring to. What he is saying is that if it is against the interest of this country with respect to investments, then we need to do something about certain regulations that instead of helping, restrict and scare away investments.” — Arjay L. Balinbin

NFA incentive payment boosts procurement from domestic farmers

THE National Food Authority (NFA) said Tuesday that it procured 1,012,172 bags of palay from farmers in the first 11 months of the year, with purchasing boosted by incentives to farmers.
According to NFA, 92% of the procurement was carried out after the agency applied a P3 “buffer stocking incentive” (BSI) payment on top of the P17 per kilo buying price for palay.
“This means that given the right price, the NFA will be able to buy more from our farmers,” Tomas R. Escarez, NFA Officer-in-Charge and Deputy Administrator for Finance and Administration, said in a statement.
“With the additional P3/kg incentive, we were able to entice more farmers to sell their harvest to us. At a time when private traders were buying at P20.28, our farmers decided to sell to us instead,” Mr. Escarez added.
Under the proposed rice tariffication law, the private sector will be mainly in charge of rice importation, while the NFA will focus on buying domestic produce.
Senator Cynthia A. Villar, who chairs her chamber’s committee on food and agriculture, said that given the additional P3 incentive, the NFA should sell rice at P33 to achieve break even.
Agriculture Secretary Emmanuel F. Piñol has announced that private entities can start preparing for importation provided they have the requirements, without waiting for the rice tariffication bill to be passed.
Mr. Escarez said that consumers were able to save P6.22 billion from purchasing subsidized rice in the 11 months to November, after over 10.36 million bags of NFA rice were distributed in those months.
He said that a consumer saves P12 by buying NFA rice at P27 per kilo, compared with the suggested retail price (SRP) of P39 for the cheapest variety of imported well-milled rice.
Meanwhile, Mr. Piñol said that he is not certain about the future of the SRP regime for rice once the rice tariffication law takes effect.
Mr. Piñol told reporters: “We have instituted measures to ensure stable prices. Rice, for example. My worry with the implementation of the tariffication, bordering on liberalization, is what will happen to our SRP program.”
Mr. Piñol added: “Based on my understanding, the regulatory powers of NFA will be removed. I don’t know who will supervise the SRP program. I don’t know if there will still be P27 or P32 government-subsidized rice in the market. This is something I would have to clarify today.”
Mr. Piñol also said that he has instructed the NFA to investigate the proliferation of special rice, whose prices are less regulated.
“I asked NFA to check. Suddenly there is a lot of special rice in the market because the traders know it is not covered by SRP. We will check on this. I will ask our grains experts,” Mr. Piñol said.
Thirty companies have applied to import 274,476 metric tons (MT) of rice, as of Dec. 3, according to the NFA website. — Reicelene Joy N. Ignacio

Finance dep’t to lobby Senate for P60 cigarette tax

THE DEPARTMENT of Finance (DoF) will push for its original version of a P60 per pack tobacco tax after the House of Representatives approved a lower rate.
“There’s still the Senate. We will try our best. This thing doesn’t end until the President signs it. We’re there, we’re keeping at it. We hope that they will come up to what is good for the country,” Finance Secretary Carlos G. Dominguez III said in a statement.
The House approved on final reading House Bill No. 8677, which proposes to increase the excise tax on tobacco products gradually by P2.50 per pack every year beginning at P37.50 in July 2019 to P45 in July 2022, and a 4% annual hike thereafter.
The bill passed with 187 affirmative votes, seven negative votes and one abstention.
The DoF wants to charge P60 per pack in 2019, with an annual increase of 9%, packaging the legislation as a health measure to deter cigarette consumption, with support from health advocates.
Excise taxes on tobacco are at P35 per pack as of July under the Tax Reform for Acceleration and Inclusion (TRAIN) law, from P30 per pack in January. The law will also raise tobacco taxes to P37.50 by 2020, and P40 per pack by 2022.
The DoF said that its measure is a stronger deterrent to smoking, especially among young people. The higher tax is also expected to help raise funds for Universal Health Care (UHC).
“Society has to agree what is more important: enough money for health care or favoring companies that produce products that damage health? That’s what society has to agree on, and that’s what the representatives in the legislature are supposed to reflect,” Mr. Dominguez said.
“Our revenues have to keep on going up because we are supporting a lot of people who are getting sick from smoking. That was all in the testimony. I was reading the summary of the testimonies, it’s overwhelmingly in favor of higher taxes for health reasons,” he added.
The Department of Health (DoH) hopes to reduce smoking prevalence from 22% in 2015 to 15% by 2022.
“Are we going to favor a few for the benefit of many? Again, it’s up to the legislature. We will continue our position, try to show the results why it is beneficial to have higher taxes.”
The DoF said that it has been collecting about P100 billion from tobacco taxes since the Sin Tax Reform law of 2012.
“Thus, amending the Sin Tax Reform Law to enable additional price increases on tobacco products is a win-win measure in terms of health, equity and revenues,” said Finance Assistant Secretary Antonio G. Lambino II in the same statement.
“One, it is an effective pricing strategy to reduce smoking; second, a healthier population leads to lower health care costs; and third, raising tobacco taxes generates substantial revenues for health care expenditures like universal health care, which benefits primarily the poorest of the poor,” he added.
The DoF also noted that cigarette tax increases do not adversely affect tobacco farmers but even benefits them.
“The decrease in the number of tobacco farmers, meanwhile, cannot be attributed to higher excise taxes, but to the introduction of other profitable farming opportunities available to them, such as shifting to high-value crops, which is also the intent of sin tax reform,” Mr. Lambino said.
“The welfare of tobacco farmers should be addressed through an expenditure policy, not through the tax structure. If, indeed farmers are at risk because of higher tobacco taxes, the Department of Agriculture, NTA (National Tobacco Administration) and the host LGUs (local government units) should have used the earmarked funds intended for tobacco farmers as provided in the law,” he added. — Elijah Joseph C. Tubayan

Bicam panel agrees to SALN or total assets option for tax amnesty legislation

THE bicameral conference committee reconciling the tax amnesty bills agreed to give taxpayers the option to submit either a statement of total assets or a statement of assets, liabilities and net worth (SALN), along with a general tax amnesty return, when availing of the amnesty.
The committee had yet to approve the bill on Monday due to disagreement on the provisions covering the amnesty’s exemptions. A number of other provisions have been reconciled, such as the general tax amnesty requirements.
House Bill No. 8554 requires the submission of the statement of total assets when filing for a general tax amnesty, with amnesty payments set at 2% of assets, while Senate Bill No. 2059 requires a SALN, at a corresponding rate of 5% of net worth.
Senator Juan Edgardo M. Angara, who chairs his chamber’s ways and means committee, said a compromise was reached among the House and Senate representatives to the bicameral conference committee to offer both requirements as options.
He said providing options for taxpayers will encourage more Filipinos to avail of the amnesty. He added that this mechanism would also increase collections for the government.
“Our theory is to make the amnesty as attractive as possible. We want the people to be encouraged to legitimize any transactions on any wealth that has been accrued. Many of these are not collected by the BIR (Bureau of Internal Revenue) so it’s actually to clean up the system and also raise revenue for the government,” he told reporters.
“A successful amnesty is premised on the availment by the large majority of taxpayers. So the more attractive it is, providing an option will definitely make it more attractive,” he added.
If a taxpayer opts for the statement of total assets, the general amnesty tax rate will be 2% of his or her total assets as of Dec. 31, 2017. If the taxpayer provided a SALN, the rate will be 5% of his or her net worth as of the same date.
“That’s the compromise. We adopted both,” Mr. Angara said.
The tax amnesty bill provides taxpayers a one-time amnesty for estate taxes, unpaid general taxes and delinquencies. It forms part of the so-called Package 1B, consisting of provisions that had been stricken from Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Act (TRAIN) law.
Aside from the provisions on the general tax amnesty documents, the House and Senate panels also agreed to include the Bureau of Customs (BoC) collections in the bill’s general tax amnesty coverage.
They also removed a provision from the House Bill which disqualifies the total assets option if assets are 30% or more understated.
The Senate contingent was composed of Mr. Angara, President Pro Tempore Ralph G. Recto, Minority Leader Franklin M. Drilon, and Senator Nancy S. Binay-Angeles. Meanwhile, the House contingent included ways and means committee chair Estrelita B. Suansing, Quirino Rep. Dakila Carlo E. Cua, Iloilo Rep. Arthur R. Defensor, Jr., Deputy Speaker Prospero A. Pichay, Jr. Batangas Rep. Lianda B. Bonilla, and 1-PACMAN partylist Rep. Michael L. Romero. — Camille A. Aguinaldo

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