calorie bijou: Moody's eyeing progress of sin tax bill in PHL Congress

Global debt watcher Moody?s Investors Service is keeping an eye on the sin tax measure now pending in the Philippine Congress where it is up for discussions at the bicameral conference committee level.
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Moving forward, what Moody?s wants to see ? in particular ? is how the legislated sin tax measure would impact on and sustain the government?s fiscal needs, said Christian de Guzman, Moody?s lead analyst for the Philippines, in response to an e-mailed query by reporters in Manila. ?
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The measure seeks to increase taxes on tobacco products and alcoholic beverages over five years.
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?We would see the actual passage of the bill as positive as it would help to increase the government?s revenues,? Singapore-based De Guzman noted.
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?Relative to other countries with similar ratings, the Philippine government?s revenues are far lower and thus have an adverse impact on key ratios of fiscal sustainability that we monitor,? he added.
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Last month, Moody?s upgraded its ratings on Philippine foreign and local currency long-term bonds to a notch below investment grade (Ba1 from Ba2), which confirmed the earlier ratings given by Fitch Ratings and Standard & Poor?s.
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?I think it?s also important to note that the dimensions of the sin tax bill post-bicameral conference are as yet unclear,? said De Guzman.
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Because the additional revenues will fund healthcare spending, the actual passage of the bill would have neutral impact on the deficit, according to Moody?s.
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Still, the measure?s actual passage into law bodes well for the government?s efforts to improve revenues, according to the analyst.
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Such development reflects a concrete example of the 15th Congress actually enacting a new legislation in aid of government?s finances, De Guzman added.
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?The 15th Congress had not achieved any significant developments with regards to revenue previously, while the 14th Congress was characterized by the passage of several revenue eroding measures,? he noted.
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The bicameral conference committee will reconcile both versions of the Sin Tax Reform Bill approved by the Senate and the House of Representatives. The Houser version seeks additional revenues of P31.5 billion in the first year of implementation and the Senate version is eyeing to raise P40 billion more in the same period. ? VS, GMA News