RA 11635 brings much-needed reprieve to private schools
Statement of Senator Pia S. Cayetano
Chair, Senate Ways and Means Committee
Principal sponsor, RA 11635
Private schools are the government’s partners in education. In this time of pandemic, they need as much assistance as they can get to continue delivering quality education to Filipino learners.
Thus, the enactment of Republic Act (RA) 11635 comes as a welcome development for them amid the uncertainties of the times, as rising COVID-19 cases forced us to restrict face-to-face classes to start the New Year.
This timely measure, which I sponsored, amends Section 27(B) of the National Internal Revenue Code, to clearly indicate that all proprietary educational institutions, whether for profit or non profit, shall enjoy the 10% preferential tax rate.
This shall also allow them to be covered by a provision under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, which reduced the tax rate of such institutions from 10% to 1% starting July 1, 2020 to June 30, 2023.
With this measure, private schools would be given much-needed reprieve to cope with the continuing challenges caused by the pandemic, starting with their own financial viability and sustainability.
It must be emphasized that this law resulted from continuous dialogue and cooperation among the various stakeholders. We worked with the Bureau of Internal Revenue (BIR) and the private schools, led by the Coordinating Council of Private Educational Associations of the Philippines (COCOPEA), to root out the issues and find a common solution.
We need to continue working with our partners in education for long-term solutions in terms of policy and budget, using strategic foresight and futures thinking to help this sector recover from the pandemic, and beyond.
This is part of our country’s commitment under Sustainable Development Goal No. 4, which is to ensure inclusive and equitable quality education for all by year 2030. #
Senate Ways and Means Committee Chair Pia S. Cayetano welcomed wide support coming from different stakeholders for the immediate passage of the proposed Passive Income and Financial Intermediary Taxation Act (PIFITA).
The panel on Wednesday (February 12) held its second hearing on ‘Package 4’ of the government’s Comprehensive Tax Reform Program (CTRP), which seeks to make passive income and financial intermediary taxes in the country “simpler, fairer, more efficient, and more regionally competitive.”
During the hearing, various stakeholders from government, business organizations, industry groups, and private companies expressed their support for the measure, with only a few concerns raised regarding specific provisions.
Manifesting general support for PIFITA were representatives from the Bangko Sentral ng Pilipinas (BSP), Bureau of Internal Revenue (BIR), Bureau of the Treasury (BTr), Capital Market Development Council (CMDC), Insurance Commission (IC), Association of Global Custodians (AGC), Philippine Insurers and Reinsurers Association (PIRA), and Philippine Stock Exchange (PSE), among others.
“I am very happy to hear that most [stakeholders] are supportive [of PIFITA], and there are just a few issues that need to be resolved,” Cayetano stressed in an interview on the sidelines of the hearing.
On the other hand, the senator noted that the concerns raised by various sectors would also be taken into account when the committee drafts its version of the bill.
Finance Undersecretary Karl Chua, for his part, said the administration remains open to endorse the amendment of certain provisions that are worrisome for industries.
“When you think of passive income, there are many other areas that are affected, like trust corporations, thrift banks, microfinancing, insurance corporations, non-life and life. The objective of the administration is to simplify it… So we have to hear everybody so that we are sure about the effect on all of these sectors,” Cayetano stressed.
“Ang objective talaga natin is to provide a market so that the Filipino citizens – hindi lang mayayaman kundi ang mahihirap – can invest their money and have access to these markets. Para hindi naman mauubos ng taxation ang kanilang mga iniipon,” she added.
The senator said the panel is planning to conduct at least two technical working groups (TWG) to discuss and address specific concerns on certain provisions of the measure.
“At this point, everything is open. I understand the [stakeholders’] concerns. They want a level playing field. We don’t want to create a situation where we are discouraging investments in certain sectors. So we take note of [those concerns and] we want to study them properly,” Cayetano said.
“We just have to [make] clear with everyone that we can try our best to address their concerns,” she further noted. #
Senate Ways and Means Committee Chairperson Pia S. Cayetano assured that the committee report for the proposed Corporate Income Tax and Incentives Rationalization Act (CITIRA) will be fair to all sectors, including foreign investors and local business owners.
The Senator made this announcement during an interview with media members after the panel’s hearing on Wednesday (February 5).
“Basically, the flow will be the same, except that there are clearer parameters. There are clearer numbers, so that the industries can make their computations. They can know what their futures would be like, which is what I have gathered in the many talks I have with them,” she stressed, referring to the CITIRA committee report.
“There will be sunset provisions on a particular date, and the new dates are very clearly identified, so they know what they deal with. That is what I want. A vibrant economy that is predictable for our investors,” she added.
Cayetano said she plans to deliver her sponsorship speech on the CITIRA bill next week.
Meanwhile, the panel conducted its first public hearing on proposals to make passive income and financial intermediary taxes simpler, fairer, more efficient, and more competitive regionally under Package 4 of the Comprehensive Tax Reform Program (CTRP), also known as Passive Income and Financial Intermediary Taxation Act (PIFITA).
The hearing invited DOF Undersecretary Dr. Karl Kendrick T. Chua, who explained the ten reasons why the reform for the passive income and financial intermediary tax system is necessary. For each reason, he elaborated on the corresponding problems and the DOF’s proposed solutions.
In particular, individual citizens stand to benefit from the tax reform, according to Undersecretary Chua. Those individuals who put their savings (their passive income) in the bank will be taxed less, based on the proposed tax reform.
The Ways and Means Committee is set to continue discussions on the tax measures in the following weeks. #
Following the passage of the Sin Tax Law that substantially raises taxes on electronic cigarettes, Senator Pia S. Cayetano appealed to fellow parents to safeguard and educate their children from the dangers of picking up “these new dangerous vices” that seem to be targeting the youth.
“This is my call to all Filipino parents, please (discourage your children from) using these heated tobacco products (HTPs) and vapes. These devices are harmful to their health,” said the senator, who sponsored the sin tax measure in the Senate as Chair of the Ways and Means Committee.
The senator had initially pushed for higher tax rates on HTPs and vapes, citing evidence from health experts that such products could not be considered as effective cessation devices, and that they could cause harm to non-smokers and the youth.
“I based my position on [scientific evidence and] the recommendations of health advocates, no less than the World Health Organization (WHO), that we treat these e-cigarettes and HTPs equally as if they are cigarettes,” she stressed during a press conference with sin tax advocates on Tuesday (January 28).
“It is my job to veer on the side of safety. That ‘s why the position I’ve always taken is, unless there is convincing evidence that these are truly cessation products, and that these companies are willing to register them as such, then we should treat them as harmful products,” Cayetano added.
On this note, the senator reiterated her call for young Filipinos and non-smokers to avoid using e-cigarettes, HTPs, and vapes, as these could cause serious damage to their health.
“I call on all our young people. I will never get tired of reminding you that these products – HTPs, ENDS/ENNDS (Electronic Nicotine/Non-Nicotine Delivery Systems), and vapes – can be dangerous to your bodies. We don’t want you to take on these brand new vices,” Cayetano stressed.
Meanwhile, the senator expressed commitment to work with fellow legislators, other government agencies, and advocacy groups in assessing and strengthening the country’s smoking- and drinking-cessation programs. #
One of the primary objectives of increasing sin taxes is to make alcoholic beverages less accessible to the country’s youth, Senator Pia S. Cayetano said on Tuesday (November 5).
The chairperson of the Senate Ways and Means Committee stressed this point at the resumption of plenary debates on Senate Bill No. 1074, which seeks to raise the excise taxes on alcoholic beverages and e-cigarettes, including heated tobacco products and vapes.
Responding to the interpellation of Senator Manny Pacquiao, a co-author of SB 1074, Cayetano noted, “What we want to achieve is [to significantly raise alcohol prices] so that these are not so accessible to the most vulnerable: the children and youth.”
“Hindi po tayo naniniwala na kailangan affordable ang alak sa ating mga kabataan. For example, sa isang bote ng gin, ang karagdagang presyo lang dito ay P2.00 per shot [under SB 1074]. Nasa P6.00 ang isang shot [based on the current price of gin],” she explained.
Cayetano also defended the tax rates proposed under SB 1074, which are notably higher than the rates approved by the House of Representatives and those recommended by the Department of Finance (DOF).
“What I have proposed is a rate that is higher than that passed in the House of Representatives. In fact, it is also higher than that initially showed to me by DOF. But both the DOF and DOH [Department of Health] now support my version,” she said.
The senator explained that, even with the P47.9 billion additional revenues that can be generated under her proposal, there would still be an P11.8 billion gap in the funding for government’s Universal Health Care (UHC) program.
Even if this gap is bridged, she said the UHC would only be able to deliver bare minimum services because of the program’s huge funding requirement. As such, she said any additional health revenue should be welcomed to grant Filipinos better access to basic and specialized health services.
“Kailangan lang natin bumisita sa isang healthcare center para maintindihan natin na malayo pa ang patutunguhan natin… Yung mga nakikita nating mga ospital na dilapidated, hindi pa lahat ora-orada magagawa,” Cayetano pointed out.
“Items like catastrophic illnesses, including cancer, hindi pa po covered ng mga packages natin sa UHC. In fairness to DOH and PhilHealth, every year they are increasing and improving their packages. But that is the nature of the problems they face because of the lack of funding… And because we are a country with more than 7,000 islands, it’s going to be very difficult to readily provide the kind of health care we dream of,” she added.
Meanwhile, Cayetano clarified that taxation alone cannot address the country’s problems on alcoholism and cigarette addiction, stressing that it is just part of a more comprehensive plan to protect Filipinos’ health and wellbeing.
“Taxation is not meant to be used as a lone preventive tool, but should be [implemented] along with other measures including education campaigns and advocacies,” she said. #
The Senate Ways and Means Committee, under the chairmanship of Senator Pia S. Cayetano, has presented to the plenary Senate Bill No. 1074 seeking to increase excise taxes on sin products, with the objective of augmenting funds for universal health care and protecting citizens, particularly the youth, from the harmful effects of drinking and electronic cigarettes.
Delivering her sponsorship speech on Wednesday (September 25), Cayetano stressed the need to impose “significantly higher” tax rates on alcohol, e-cigarettes, and heated tobacco products (HTPs) in order to safeguard Filipinos’ health and wellbeing.
Cayetano’s committee is proposing the following excise tax rates for the different types of alcohol products:
Distilled spirits: an ad valorem tax of 20% and a specific tax of Php 90 per proof liter on Year 1, to be increased by Php10 every year until Year 4, and by 10% every year thereafter.
For fermented liquor and alcopops: a specific tax rate of Php 45 per liter on Year 1, to be increased by Php10 every year until Year 4, and by 10% every year thereafter.
For wine products: a specific tax of Php 600 per liter for sparkling wines and Php 43 per liter for still and carbonated wines, to be increased by 10% every year thereafter.
The Ways and Means Chair explained that the specific tax rate on distilled spirits was raised to Php 90 because they have the highest alcohol content among the different types of alcohol products, and as such are the most harmful to people’s health.
Furthermore, the Committee proposed to tax e-cigarettes, HTPs, and vape products the same rate as conventional tobacco products.
The Committee proposed to tax HTPs at P45 per pack of 20 in 2020, increasing such rate to P5 per pack per year like regular cigarettes. For vape products, the recommendation is to tax those containing freebase nicotine at P45 per 10ml or a fraction thereof; and those containing nicotine salts at P45 per 1ml or a fraction thereof.
In pushing for higher taxes on alcohol, Cayetano said there is “glaring evidence” that the excessive use of such products endangers people’s health.
“Alcoholism is associated with at least 39 main diseases, including liver cirrhosis, cancer, pancreatic disease, hypertensive disease, tuberculosis, diabetes, and even behavioral and psychotic disorders,” she said, citing a report by the Global Burden of Disease Study.
Also, World Health Organization data revealed that in 2016, 4,431 per 100,000 population of Filipinos died from liver cirrhosis; while 16,418 died from hypertensive diseases; and 8,526 from tuberculosis.
“All of which were due to the excessive use of alcohol,” Cayetano pointed out.
“The impact of our problem on alcoholism is not felt by the drinker alone,” she further stressed, adding that excessive drinking is also a common cause of road crashes and a contributor to family violence.
The senator lamented that, with these products becoming more accessible to vulnerable sectors, there is a risk that these numbers and incidents would continue to grow. Hence, the need to increase their prices and make them less affordable.
Cayetano said the measure seeks to address the high drinking prevalence among Filipinos, who on average are already consuming 11 liters of hard alcoholic beverages per year. This is higher than the global and ASEAN averages of below 10 liters.
“Global champion na po tayo, sa inuman. But that is not something we should be proud of,” the senator said, adding that the prices of alcohol in the country should not be so cheap as to allow Filipinos, especially the young people, to easily have access to them.
E-cigs and HTPs
“For the sake of our children, we must regulate and tax e-cigarettes at parity with regular tobacco products. Other countries are already doing this. We should at least keep pace. Vaping is not cool when it leads our kids to the path of new addictions,” Cayetano said about e-cigarette products.
The senator questioned the position of manufacturers and distributors who claimed that e-cigarettes are a viable and less harmful alternative to conventional smoking.
“The industry claims that it is a safer product but medical experts have pointed out that safer does not mean safe or risk-free. We have already seen and heard an avalanche of news of people who died because of lung failure in the United States – people who were consistent users of these vape products,” she said.
“Thus, Mr. President, this representation asks that we err on the side of caution,” she added during her speech.
Apart from the sin tax bill, Cayetano said she plans to file more measures seeking to address the country’s problems associated with alcoholism and the dangers of vaping among the youth.
“This Committee is tasked with the taxation of these products. But this, in no way, limits DOH [Department of Health] and Congress to undertake steps to protect the health of the people,” she said.
“We remain cognizant that taxation is just one tool and that a comprehensive strategy is necessary. We urge DOH [Department of Health] to work with our medical community on this through aggressive interventions and policies.” #
Senator Pia S. Cayetano appealed to alcohol industry players to refrain from misleading the public into thinking that raising ‘sin’ taxes on alcoholic beverages, which would also increase the cost of these products, is detrimental to Filipinos, particularly the poor.
“When we’re talking about [taxing] sin products, please do not scare the people into thinking that what [the government is] trying to do is harmful to the Filipino people,” the senator stressed in an interview at the Senate.
Cayetano chairs the Senate Ways and Means Committee that tackles the proposed measures seeking to increase sin taxes on alcohol and e-cigarette products (Package 2+ of the Comprehensive Tax Reform Program or CTRP).
The panel on Thursday (August 29) conducted its second public hearing on Senate Bill No. 383 and House Bill No. 1026 – Increasing the Excise Tax Rates on Alcohol Products and E-Cigarettes.
Industry leaders were given the opportunity to present their position on proposals to raise taxes on alcohol products to augment funds for the government’s universal health care program. A particular argument raised by Distilled Spirits Association of the Phililpines (DSAP) President Olivia Limpe-aw was that hiking taxes on their products would “deprive the poor of their little happiness.”
Cayetano, in response, stressed that the poor deserve a “better kind of happiness” – one which will not cost them their health and their families’ wellbeing.
“I would often hear, ‘Do not deprive the poor of the things that make them happy,’ supposedly alcohol and cigarettes. That is such a sad, sad fact. Because in the long run, that is what causes them so much misery,” she said.
“If it is our goal to become an upper-middle income country, can we not leave our poor with this kind of happiness [harmful vices like smoking and excessive drinking]? Can we offer them instead a better kind of happiness, including educating them as to the right choices they could make?” she asked.
Furthermore, the senator warned industry players against painting a false picture that the proposed sin taxes would lead to job losses.
More than anything, Cayetano said the country’s alcohol problem causes more damage to millions of Filipino families in terms of related diseases, road crashes, domestic abuse, and crimes, and therefore should be addressed through a variety of public health interventions and social reforms, including taxation.
“If you’re going to say that there’s X amount of people to lose jobs, then I am going to dig up all the figures to show how many families are affected by the same sin products – how many deaths, how many battered women, how many neglected children,” she emphasized.
The senator, a staunch health advocate, also had this appeal to members of media: “Ang pakiusap ko sa inyo, don’t use these [one-sided] stories without also including stories about the deaths [caused by alcohol consumption], the children who are violated, and the women who are left homeless or who have to give up food on the table [in favor of spending on alcohol].”
Meanwhile, the senator said she would continue to keep open mind in considering certain concerns raised by industry during the hearing. The Ways and Means Chair plans to create a technical working group to reconcile the positions of the Finance department with other stakeholders before finalizing the committee report next month. #
Senate Ways and Means Committee Chair Pia S. Cayetano will lead on Tuesday (August 20) the panel’s second public discussion on the government’s Comprehensive Tax Reform Program (CTRP).
Discussions will focus on Package 2+ of the CTRP, which imposes higher excise taxes on alcoholic beverages. E-cigarettes, including heated tobacco and vapor products, are also covered by the proposal, but these will be taken up separately in a future hearing.
Cayetano said Package 2+ of the CTRP aims to discourage consumption of various ‘sin’ products among Filipinos, especially the youth and poor. At the same time, the proposal ensures the financial sustainability of government’s Universal Health Care (UHC) program.
“In the Ways and Means Committee, it’s my job to look for funding for our health programs, because I am very familiar with the needs of Filipino families,” stressed Cayetano, one of the Senate sponsors of the original Sin Tax Reform Act of 2012 (RA 10351).
“When it comes to sin products, these are taxed high in several countries all over the world. Sadya hong hindi mura ang mga nakakamatay na produkto sa maraming bansa. At binubuwisan natin ito dahil ayaw po natin na mamatay ang mga Pilipino sa mga sakit, aksidente, at peligro na dulot ng mga produktong ito. Ayaw din natin na mura ang alak at sigarilyo para hindi nabibili ng kabataan,” explained Cayetano.
The government’s official position will be presented by officials from the Department of Finance and the Department of Health.
Representatives from various agencies were invited to give their position on the proposal, including the Department of Transportation (DOTr), Metropolitan Manila Development Authority, Philippine National Police’s Highway Patrol Group, Land Transportation Office; World Health Organization; Motorcycle Federation of the Philippines; and ImagineLaw, Inc.
Civil society and medical organizations were also invited, including Health Justice; Action for Smoking and Health; Action for Economic Reforms; Public Services International; University of the Philippines College of Medicine; Independent Health Advocate Manila Doctors Hospital; Kalusugan ng Mag-Ina; Southeast Asia Tobacco Control Alliance; Philippine Medical Association; Philippine Society of Gastroenterology; Hepatology Society of the Philippines; Philippine College of Physicians; Philippine Academy of Family Physicians; Philippine College of Chest Physicians;
Philippine Pediatric Society; Philippine Society of Clinical and Occupational Toxicology; Philippine College of Addiction Medicine; The Society of Adolescent Medicine of the Philippines; Philippine College of Occupational Medicine; Philippine Psychiatric Association; Philippine Mental Health Association; Philippine Neurological Association; Philippine Society of Medical Oncology; Philippine Heart Association; Philippine Society of General Internal Medicine; Philippine Society of Hypertension; Philippine Society of Nephrology; and Philippine Society of Endocrinology, Diabetes, and Metabolism.
Also asked to join the hearing were women and children groups – Child Protection Unit of the Philippine General Hospital; Safe Kids Worldwide Philippines; Commission on Women; and Child’s Rights Coalition.
Tax reform measures form an integral component of the Duterte administration’s strategy to achieve its growth targets under AmBisyon 2040 and the United Nations’ Sustainable Development Goals (SDGs). #
Senator Pia S. Cayetano has called the attention of distributors and sellers of flavored alcoholic drinks called “alcopops” for using unethical and illegal marketing schemes to entice young Filipinos to buy their products. Alcopops are flavored alcoholic beverages, a variety of which is packed in colorful foil pouches similar to juice beverages. “I was very bothered when I found out about it. It’s packaged in a very colorful packaging that is very attractive to kids,” Cayetano stressed during the Senate Ways and Means Committee’s organizational meeting on Thursday (August 15). During the hearing, the Department of Finance (DOF) presented an overview of the remaining tax packages under the Comprehensive Tax Reform Program (CTRP), among which is the proposed increase in the excise tax on alcohol products. “I accepted the chairmanship of the Committee on Ways and Means precisely to be able to see through the delivery of public services that I’ve always dedicated my time and energy [to],” said Cayetano, who chairs the panel. The senator particularly expressed concern over the increasing consumption of alcopops among Filipinos. DOF figures show that Filipinos spent P69 million for alcopops in 2018, more than twice higher than the P30 million consumed in 2017. A particular brand of alcopops is currently being sold at P25 per 200 ml pack and has an alcohol content of 7 percent. Under the current tax rates, its total excise tax is only P1.30 per pack. The DOF is proposing to increase its tax rate to P8.00 per pack. Cayetano for her part decried the easy access of young children to the alcoholic drinks, which are being sold alongside regular non-alcoholic drinks in groceries and even online. Apart from this, the colorful packaging also makes it appealing to minors. As such, the senator called for the products to be pulled out of store counters and for the Food and Drug Administration (FDA) to regulate the packaging, distribution, and sale of such alcoholic mix beverages. “We’re trying to sell a product that has 7 percent alcohol and is packaged to make it very attractive to children. It is unethical and unlawful,” she said. “Nananawagan ako sa mga matitino at maaayos na businessmen. Siguro naman sa sarili niyong anak, hindi niyo ipapainom ‘yan,” she further stressed. The senator, who earlier fought for the passage of the Sin Tax Reform Act of 2012, noted that a similar issue was raised in the Senate about how the marketing schemes of certain tobacco companies enticed the youth to try cigarettes. #
“The time is right to re-study our tax rates and incentives.” Senate Ways and Means Committee Chair Pia S. Cayetano said this on Thursday (August 15), following the panel’s organizational meeting to discuss the Duterte government’s Comprehensive Tax Reform Program (CTRP). Cayetano heads the Senate body tasked to tackle the remaining tax proposals under CTRP, including Package 2, which seeks to lower corporate income taxes (CIT) and rationalize incentives given to investors. “I do believe that the time is right to study the rationalization of our corporate holidays and various incentives so that we can prioritize the corporations that are really contributing to our sustainable economic growth,” she stressed. The senator said the ultimate goal is to come up with a measure that would generate the needed funds for programs that will benefit Filipino families, especially those belonging to the vulnerable sectors. Furthermore, she said ensuring the people’s access to basic social services would allow the country to fulfill its commitment to the United Nations’ Sustainable Development Goals (SDGs), which serves as a blueprint in achieving a more sustainable future for the country. Package 2 of the CTRP proposes to lower the country’s CIT rate from 30 to 20 percent. It also seeks to rationalize incentives being given to companies investing in the country, to ensure that such advantages granted to them can generate domestic growth and employment for Filipinos. “Very clear naman ang presentation ng Department of Finance (DOF). Compared to other countries in the region, the Philippines has a high taxation rate. The objective is to lower that rate to make us more competitive and so that we will have more jobs,” Cayetano stressed. “We should also not grant incentives to businesses that are not really contributing to our economy,” she further said. On the other hand, the senator assured all concerned sectors that her committee would consider all positions, including those of her fellow senators, before finalizing the committee report and passing a tax reform bill in the Senate. “We intend to have weekly hearings [to discuss all tax measures]. Kailangan mag-double time kaming lahat,” she said. The Ways and Means committee is set to conduct its second hearing on Tuesday (August 20), which will primarily focus on Packages 2 and 2+ of the tax reform program.#