In the wake of the controversies generated by the sin tax reform bill, European businessmen said the Philippines should   comply with a ruling of the World Trade Organization (WTO) or face retaliation from the European Union.

Henry Schumacher, vice president of the European Chamber of Commerce of the Philippines (ECCP) said in a press briefing that not even the original sin tax reform bill authored by then Rep. Joseph Emilio Abaya nor the Senate committee report removed the discrimination on imported spirits.

Essentially, this  requires that at  the tax rate on alcohol content on local brands should be the same as the foreign brands.

The  EU can unilaterally withdraw the generalized system of preferences (GSP) privileges of the Philippines as well as those given to tuna exports to the bloc in retaliation.

Schumacher said now that the Philippines is reforming its tax system, it should simultaneously address the discriminatory provisions by March 8, 2013  much the same way that the Philippines wants Thailand to comply on a WTO ruling over cigarettes.

“That’s the safe way to go, why not make it compliant?,” said Schumacher of the sin tax bill.

He said the potential taxes to be raised out of spirits under the Abaya bill is P1.5 billion. 

Schumacher said the ECCP is of the opinion that the Philippines should move towards unitary system over a three-year period “to make it easier to  politicians.” “By 2015, we should move to unitary system,  that’s something we can live with.”

“After all the drama (resignation of Sen. Ralph Recto as chairman of house and ways committee and the withdrawal of the committee report),  they should find a compromise so as not to have difficulty by March,” Schumacher said.

Source: Malaya; Business; 17 October 2012