Country said to have lost liquor tax dispute BRUSSELS/MANILA -- Taxes levied by the Philippines on alcoholic drinks from the European Union and United States are illegal under global rules, the world’s trade dispute body ruled on Monday, according to sources close to the case.Washington’s envoy in Manila said he welcomed the decision, while the Philippines’ tax chief -- insisting that the duty system was not discriminatory -- said it would be up to legislators to change relevant laws. Sources said that a World Trade Organization (WTO) legal panel, in a confidential report circulated to the parties involved in the dispute, had ruled that the Philippines’ taxes discriminate against brands such as Jack Daniel’s and Jim Beam as well as Spain’s Brandy de Jerez, while favoring domestic producers catering to the country’s $3-billion spirits market. The ruling is confidential until its publication in August, and trade officials for the EU and US were unable to comment on its contents. But it is being eyed keenly by Spanish brandy makers and US firms such Brown-Forman Corp. , which owns Jack Daniel’s, and Fortune Brands Inc., which makes Jim Beam. “We have long questioned the Philippines’ discriminatory tax approach. We are optimistic of a positive result from the WTO panel, which will be particularly welcomed by Spain since Spanish brandy constitutes the main EU spirits export to the Philippines,” said Jamie Fortescue, director general of the European Spirits Organization. The ruling dismissed Manila’s argument that imported whiskey and brandy do not compete with locally made alcohol and that differing taxes -- set according to the raw material used -- should therefore be legal, sources said. It found that the purpose of a lower tax on domestic alcohol that can be directly substituted for imports was to protect domestic producers, an illegal aim under WTO rules. The EU, whose annual global spirits exports amount to about 7 billion euros ($10 billion), blames the tax for halving EU spirits sales to the Philippines between 2004 and 2007 to 18 million euros. Brussels lodged a WTO challenge against the Philippines in January last year. The United States, which followed suit with a similar challenge in April last year, similarly says the Philippines’ tax system -- imposing duties 10-40 times higher on spirits not distilled from materials such as sugar cane and molasses produced in the Philippines -- means it has failed to gain more than 5% of the country’s market. In Manila, US Ambassador Henry K. Thomas said Washington welcomed the WTO’s preliminary decision. “The US looks forward to a level playing field in the country, since the consumer benefits with fair prices even from goods coming from outside the Philippines,” Mr. Thomas Jr. said at the sidelines of a Management Association of the Philippines press conference. Bureau of Internal Revenue (BIR) Commissioner Kim S. Jacinto-Henares, meanwhile, said it would be up to Congress to amend the country’s tax laws once the WTO ruling becomes final. “I will still collect excise taxes, as stated in the National Internal Revenue Code (NIRC). There will be no changes until Congress amends the law,” Ms. Henares told BusinessWorld. Under Section 141 of the NIRC, alcohol products produced from the sap of nipa, coconut, cassava, camote, buri palm or from the juice, syrup or sugar of the cane are charged an P8 excise tax per proof liter. Alcohol products not made from the identified raw materials are levied an excise tax of between P75 to P300 per proof liter Imported spirits tend to fall under this category because they are usually made of barley, wheat and grapes, Ms. Henares explained. -- reports from Reuters, Diane Claire J. Jiao and Eliza J. Diaz Debt exchange rescheduled due to approval delay A PLANNED local bond swap could be launched next week after delays in documentary approvals pushed back the offer from yesterday’s target, a treasury official said. The government had said it wanted to swap shorter-dated local bonds for new 10-year and 20-year on June 28, with the offer period to be closed in the first week of July, and settlement a week after. “We will have to reschedule the launch. If we get the approval [from the Office of the President] this week, the launch can happen next week,” Deputy Treasurer Eduardo S. Mendiola said. On Monday, National Treasurer Roberto B. Tan said the Bureau of the Treasury had obtained an opinion from the central bank supporting the planned debt exchange. First Metro Investment Corp., BPI Capital Corp, SB Capital Investment Corp and Citibank are joint deal managers of the swap, along with the Development Bank of the Philippines and Land Bank of the Philippines. Manila is taking advantage of strong investor interest in emerging markets to lengthen its debt maturity profile. Following swaps in the second half of last year, the Philippines’ average debt maturity lengthened to 8.8 years at end-December from 7.9 years in June 2010, with the average foreign debt maturity at 11.4 years. -- Reuters |
U.S. Stocks Rise Amid Greek Bailout Expectations as Nike Jumps U.S. stocks rose, sending the Standard & Poor’s 500 Index to its highest level in three weeks, amid optimism European nations will take action to prevent a Greek default and after Nike Inc. (NKE)’s earnings beat estimates.Nike rallied 10 percent as higher North American sales helped the world’s largest sporting-goods company top profit projections.Caterpillar Inc. (CAT), Exxon Mobil Corp. (XOM) and Alcoa Inc. (AA) added at least 2.1 percent, pacing gains in companies most-tied to economic growth. Home Depot Inc. (HD) climbed 2.4 percent after the largest U.S. home-improvement retailer said that it is targeting about $3.5 billion in share repurchases for 2011. The S&P 500 advanced 1.3 percent to 1,296.67 at 4 p.m. in New York, rising to the highest closing level since June 3. The Dow Jones Industrial Average increased 145.13 points, or 1.2 percent, to 12,188.69 today. More than 6.1 billion shares changed hands on U.S. exchanges at 5:12 p.m., 14 percent less than the three-month average through yesterday. Treasuries Tumble as Five-Year Note Auction Demand Falls to Lowest in Year Treasuries fell, pushing five-year note yields up the most since January, as speculation Greece’s lawmakers will approve austerity measures cut demand at the $35 billion sale of the maturity to the lowest in a year. Benchmark 10-year debt pared a monthly gain, pushing the yields above 3 percent on reduced concern Europe’s debt crisis will undermine the global economic recovery. The five-year note auction’s bid-to-cover ratio, which gauges demand by comparing total bids with amount of securities offered, was 2.59, the lowest since June 2010. “It was a weak auction,” said Sergey Bondarchuk, an interest-rate strategist in New York at BNP Paribas SA, one of the 20 primary dealers obligated to participate in U.S. debt offerings. “People are not really bullish at these rates because if there are hints of improvement out of Greece, that could take yields higher.” Yields on current five-year notes increased 13 basis points, or 0.13 percentage point, to 1.58 percent at 5:14 p.m. in New York, according to Bloomberg Bond Trader prices. The 1.75 percent securities maturing in May 2016 dropped 5/8, or $6.25 per $1,000 face amount, to 100 26/32. The five-year note yields earlier climbed 16 basis points, the most on an intraday basis since Jan. 5, to 1.61 percent, the highest level since June 15. The yields fell yesterday to 1.35 percent, the lowest since Nov. 23. |
Crude Oil Rises for Second Day on Greek Vote Optimism, U.S. Stockpile Drop Oil rose for a second day in New York after a report showed U.S. crude supplies dropped for a fourth week and amid optimism Greek lawmakers will approve austerity measures to prevent a debt default.Futures increased as much as 0.6 percent after climbing the most in six weeks yesterday. Greek Prime Minister George Papandreou’s 78 billion euro ($111 billion) plan to cut spending and sell assets is set for a vote in parliament today. Crude stockpiles dropped 2.7 million barrels last week to 360.3 million, according to the American Petroleum Institute. “There’s great hope that this plan for Greek debt will help turn the corner,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “It’s optimism that the Greeks aren’t going to default and the euro is not going to break up.” Crude for August delivery advanced as much as 51 cents to $93.40 a barrel in electronic trading on the New York Mercantile Exchange, and was at $93.10 at 8:54 a.m. Sydney time. The contract yesterday gained $2.28, or 2.5 percent, to $92.89. Prices are 23 percent higher the past year and down 12 percent in the second quarter. Brent oil for August settlement climbed $2.79, or 2.6 percent, to $108.78 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark traded at a premium of $15.89 to West Texas Intermediate, the U.S. benchmark grade. The spread reached a record $22.29 a barrel on June 15. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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