Solons seek exemption of jewelry industry from excise tax collection

Two lawmakers are seeking the removal of the excise tax on jewelry items to enhance the
competitiveness and growth of the countrys jewelry industry.
Subjecting the jewelry industry to taxes have proven to be unjust and inequitable as it has
driven the industry underground, according to eps. Susan !ap "#
nd
$istrict, Tarlac% and $akila
&arlo &ua "'one $istrict, (uirino%, authors of )ouse *ill +,-, seeking the removal of excise tax
on jewelry.
.t present, !ap said jewelry items are subjected to an excise tax of #/ percent and value
added tax of -# percent.
0.side from driving the industry underground, the unjust and inequitable taxes have
resulted in the proliferation of smuggling to the detriment of those jewelry enterprises trying to
surface from the underground,1 said !ap, chairperson of the )ouse &ommittee on eforestation.
Since the industry has been driven underground, she said collections for excise tax have
been negligible over the years. 2ith the passage of epublic .ct 34/#, otherwise known as the
5ewelry 6ndustry $evelopment .ct of -773, income tax collections from the industry for #//-
amounted to 89#.# million, growing only by -,.4 percent from 8+4.7 million in #///, according
to the lawmaker.
0emoving the excise tax on jewelry would result in a win:win situation for the country as
the following benefits will eventually materiali;e< the jewelry industry can join the formal sector
which would result in taxes collected from the enterprises as well as its workers= the sectors
growth into an export industry with foreign exchange earnings and improved income tax
collections= provision of lucrative work for >ilipinos who have not been able to study and enable
the education of their children as a way out of poverty= and reduction of red tape, graft, and
corruption for enterprises in order to stay in business,1 said !ap.
&ua said while the country has repressed its jewelry industry, although it is the only
country in Southeast .sia with over ?S@-# trillion in mineral reserves of gold, which is the key
raw material for jewelry, other countries in the region have nurtured their infant jewelry
industries through legislation and sustained promotion and assistance in recognition of the role of
the jewelry industry as an engine of growth for the country and more importantly for industry
workers.
0The jewelry industry is the only industry which can provide high wages and salaries for
uneducated workers, commensurate to employees of call centers,1 said &ua, a vice chairperson of
the committees on appropriations, economic affairs, and information and communications
technology.
&ua cited the daily rate of goldsmiths start at 83// while stone setters can earn up to
8-,4// a day. Aven at these rates, he said the country can compete as shown by the growth of its
NR # 3540
JULY 27, 2014
exports from ?S@-9.B million in -77, before . 34/# was passed, to ?S@44 million in #/-/.
0This represents an average annual growth rate of #-.+ percent. emoval of the major
limiting factor, which is the excise tax, would enable the countrys jewelry industry to finally
grow,1 said &ua.
)ouse *ill +,-,, now pending at the committee on ways and means chaired by ep. Ciro
(uimbo "#
nd
$istrict, Carikina &ity%, seeks the repeal of Section -4/ of epublic .ct ,,#7,
otherwise known as 0.n .ct educing The Axcise Tax ates Dn Cetallic .nd Eon:Cetallic
Cinerals .nd (uarry esources, .mending >or The 8urpose Section -4-".% of the Eational
6nternal evenue &ode, as amended.1 Section -4/ provides for the imposition of a #/ percent tax
on the wholesale price or the value of importations used by the *ureau of &ustoms in
determining tariff and customs duties, net of excise tax and F.T on jewelry.
The bill also provides for the amendment of Section -4- "a% "#% of . ,,#7 so that the two
percent tax on all non:metallic minerals and quarry resources shall not be applicable to
importation and purchases of jewelry enterprises for production supplies such as, but not limited
to, investment powder, abrasives and other items made from mineral resources required to
produce jewelry.
6t also provides for the amendment of Section -4- "a% "+% "a% of . ,,#7 pertaining to a
tax on all metallic minerals based on the actual market of the gross output. The amendment calls
for the non:applicability of such tax to purchases and importations of copper and exports of
finished or semi:finished fine or costume jewelry of the countrys jewelry enterprises.
Core so, the bill provides for the amendment of Section -4- "a% "+% "b% of . ,,#7 so that
the two percent tax on gold and chromite shall not be applicable to purchases, importations and
exports of finished goods of jewelry enterprises.
The measure also provides that all production inputs of jewelry enterprises not itemi;ed
above but which may be made of mineral products and locally purchased or imported shall be
exempted from excise tax. 6n addition, copper, gold, silver, platinum, palladium and its alloys,
imported or locally purchased, shall be exempted from excise tax whenever purchased or used by
jewelry enterprises. 'ikewise, plating solutions made of gold, silver, platinum, rhodium,
rhutenium, copper or some other metallic mineral shall be exempted from excise tax when
purchased, imported or used by jewelry enterprises.
'astly, all domestic sales and export sales of finished or semi:finished fine or costume
jewelry made by local jewelry enterprises shall also be exempted from excise tax, the bill
provides. "+/% rbb