Gov’t expects P7.6B more from ‘sin’ taxes Bulk to come from tobacco products By Ronnel Domingo Philippine Daily Inquirer
Finance Undersecretary Gil S. Beltran said in an interview that based on 2009 consumption figures, tobacco products would represent 53 percent of the additional tax take while alcohol will account for the rest. Based on the government’s excise tax collection program for 2011, Beltran said alcohol-based beverages would account for P22.5 billion or lower by 0.4 percent than the P22.6 billion collected in 2010. Excise tax collection on tobacco products is programmed at P23.6 billion this year, 8.5 percent lower than the P25.8 billion last year. Beltran said it was observed that companies “frontload” their shipments at the end of the year before a scheduled increase in excise taxes in the coming year. This means that shipments are made in advance to avoid paying higher taxes. Under Republic Act No. 9334 or the Sin Tax Law passed in 2005, the levy on cigarettes and alcohol vary in rates depending on price classification. The tax rates rise every two years starting 2005 at varying paces until 2011 when the cumulative increases reach 20 percent. The law states that the biennial increase for alcohol is 8 percent while that for tobacco is 6 percent. “The Department of Finance’s position is that the sin tax should be harmonized or there should be a single rate,” Beltran said. “The current law is so confusing that even the implementers get confused.” He said there should be a new law by 2013, preferably one that simplifies the sin tax scheme and resulting in higher taxes. Data from the Bureau of Internal Revenue show that in the 10 months to October, collection of excise tax on alcohol reached P17.5 billion or 3.5 percent higher year-on-year. Also, collection of excise tax on tobacco reached P25.1 billion or 15.7 percent higher. Emilio de Quiros Jr., SSS president and chief executive, said in a statement that the projected amount includes P2.1 billion in overdue amortizations from such employers. This means regular short-term loan payments are expected to reach P14 billion, equalling the amount recorded in 2010. “Reducing the loan delinquency of members is a top priority of SSS,” De Quiros said. “We offer the six-month amnesty program to employers since employed members make up an overwhelming majority of overdue loan accounts.” The new amnesty program, which will end on June 30, will benefit employees with overdue loans taken out under current or previous employers or when they were self-employed or voluntary members. A previous amnesty program covered SSS employees, self-employed and voluntary members for loans payments due between May 2008 and December 2009. De Quiros said the SSS collected a total of P919.8 million in principal and interest payments from that amnesty program, which was in force last year. He said the new program for employers covers salary, calamity, emergency, educational, stock investment and privatization fund loans. He said unpaid loans incur continuing interest and monthly penalties of one percent, but employers can choose to pay in full or installments of up to 24 months, which carry a 3-percent annual interest. “The SSS will waive penalties on delinquent loan amortizations due on or before April 1, 2010, which is in accordance with guidelines approved by Malacañang last June 3,” De Quiros said. “Penalties on loan amortizations that fall due after April 1 of last year are not covered by the loan condonation program,” he said. Employers applying for amnesty must be up-to-date in paying contributions to have their loan penalties condoned, De Quiros added. |
Stocks: New year, same old risks NEW YORK (CNNMoney) -- As we kick off 2011, investors are hoping to put some of the stomach churning market swings behind them. But there are still challenges that could cause some bumps in the ongoing road to recovery. On the bright side, we're a year-and-a-half out of the recession, and stocks are back to their pre-Lehman Brothers bust levels. All three major indexes finished 2010 with double-digit percentage gains. And though the economy is only recovering at half-speed, investors are growing increasingly optimistic about the New Year. In fact, more than half of all investors are bullish on the stock market, according to a survey by the American Association of Individual Investors. That's well above the historical average. And for the first time in more than eight months, investors are beginning to plow more money into the stock market than they are pulling out. Market participants pumped $335 million into U.S. equity funds in the week ended Dec. 21, according to the Investment Company Institute. All of that points to a good year for stocks but it won't be a smooth ascent. "The same concerns that affected the market in 2010 will continue to do so in 2011, so we're going to see the same volatility and lots of starts and stops," said Kate Warne, investment strategist at Edward Jones in St. Louis. Still, she thinks the bull market that started in March 2009 will continue.
The price on the benchmark 10-year note rose slightly, pushing the yield down to 3.30% from 3.37% late Thursday. Bond prices and yields move in opposite directions. The yield on the 30-year bond fell to 4.33%, while the yield on the 2-year note edged down to to 0.60%. The 5-year note's yield slipped to 2.01%. U.S. debt, which is considered a safe haven, was an attractive asset to investors during the earlier part of 2010, as concerns over Europe's sovereign debt issues were at the forefront. But as those worries faded, so did the appeal for Treasuries. That has sent yields higher, especially as better-than-expected economic news bolstered demand for riskier asset. After hitting a low below 2.4% in early October, the benchmark yield finished the year at 3.3%. As traders get back in gear for 2011 next week, analysts expect yields will continue rising as the economy recovers, despite the Federal Reserve's attempt to push rates lower. In November, the Fed announced it will pump $600 billion into the economy by June through purchases of long-term Treasuries. As part of the program, which winds down during the middle of next year, the central bank is expect to scoop up more Treasuries next week. |
Oil Surges to Highest Year-End Price Since 2007 on Dollar Oil surged to its highest year-end price since 2007 as the dollar weakened and gasoline and heating oil futures climbed. Crude capped its second consecutive year of gains as the dollar dropped against the euro, boosting commodities’ appeal as an alternative investment. Oil settled above $91 a barrel after testing technical support near $89. Gasoline and heating oil advanced before the January contracts expired today. “A weaker dollar and stronger product prices are all bolstering crude,” said Jason Schenker, president of Prestige Economics LLC, an Austin, Texas-based energy consultant. Oil for February delivery climbed $1.54, or 1.7 percent, to settle at $91.38 a barrel on the New York Mercantile Exchange. Prices fell 13 cents this week and rose 8.6 percent in December. Futures advanced 15 percent this year amid signs that the global economic recovery is gaining momentum and stoking demand for raw materials. Commodity prices beat increases in stocks, bonds and the dollar as China led a recovery from the first global economic recession since World War II. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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