Excerpts from Kapihan sa Senado with Sen. Franklin Drilon

On the tax reform bill

FMD: Magandang umaga po sa inyong lahat. Good morning and I am happy to be here once more. I can hardly breathe these days, but I try.

Q: Now that the tax reform bill is already approved, when is your plan to start the bicam?

FMD: We will start the bicam at the end of the month because I expect to finish the budget under our schedule by November 28. I have scheduled the budget to be approved on November 28 on second and third reading. By the way, that is my birthday. So parang birthday gift na lang nila para sa akin. Aprubahan na nila 'yung budget na prinisinta ko para matapos na. Tatapusin po natin ang budget. Pagbobotohan po natin sa Nobyembre 28 at siguro magkasabay na o magkahiwalay ang bicameral conference committee sa budget at saka sa sin tax. We will have simultaneous bicameral conference committee with the sin tax and the national budget. Anyway, the bicam committee on the sin tax, I foresee substantial agreement. I underscore substantial on the cigarette tax because we have projected the sin taxes to be about P23.55 Billion as against the House version of P26 Billion. The difference is not that substantial. We can discuss it. I concur with the chairman of the House Ways and Means Committee who made statements in the press that he expects easier negotiation on the cigarette. It is on the alcohol side which I expect some difficulty because we have assigned about P16 Billion for the alcohol excise tax to achieve the 60-40 ratio, whereas the rates proposed by the House would only be P5 Billion. That is where we expect some hard bargaining. I repeat, for the cigarette, it is P23.55 Billion for the Senate next year. For the House, it is 26.87 Billion. In the alcohol, we have projected P16 Billion, as against the House version of about P5 Billion. There is a difference and this is where the hard bargaining will be.

Q: House Committee on Ways and Means Chairman Isidro Ungab said that he found the Senate version workable enough.

FMD: That is a welcome statement so we have a good starting point. I read that in the media today when he said that our version is workable. I am just saying where the bargaining will be and the bargaining will be mostly in the alcohol side.

Q: Is there a possibility na i-adopt na lang nila 'yung Senate version kung sa tingin nila ay workable and acceptable 'yung Senate version?

FMD: I would be very pleased if they accept that. Indeed, the rates that we agreed on really went through a fine-toothed comb. We considered all the interest of all the sectors.

Q: Considering malaki 'yung disparity pagdating doon sa alcohol, may plano na kayo kung paano ninyo ire-reconcile 'yan?

FMD: Pinag-aaralan ko pa because we only had this finally two days ago. Our ways and means will study on how we can reconcile it.

Q: May we know kung sino po 'yung magiging members ng bicam panel pagdating sa Senate?

FMD: Wala pa. Honestly, I haven't had time to review it yet.

Q: May explanation na bang binigay ang House bakit ganun kababa 'yung excise tax sa alcohol? Paano nila na-rationalize 'yun?

FMD: I haven't heard from them. We expect that explanation in the bicameral conference committee but as Congressman Ungab said he finds our proposal reasonable and workable. I welcome that statement.

Q: Indication po 'yun na magiging smooth lang 'yung bicam?

FMD: Well, there will be some discussion that is why I do not want to be overly optimistic. It is with guarded optimism because we really need to pass this Bill before we go on break on December 21. We really need this because this is a reform measure and Commissioner Kim, in the papers today, said that the rating agencies are waiting for this and it could be the final hurdle for our being in the investment grade. Ito po, pag naging investment grade tayo, malaki po ang benipisyo sa ating ekonomiya dahil bababa ang interest sa ating utang. The interest rates will go down, and that will provide us more budget for social services para po sa mahihirap because we have allotted a budget for interest and this is based on the present rates that we have. The moment we get to investment grade, not only will we become a more attractive investment destination, but our interest rates will go down and therefore our budget for interest will also go down. That is the important thing.

Q: After sin tax reform bill, is there any new tax measure na aasahan na naman po?

FMD: One of the measures that is being pressed for enactment will be the carrier's tax on international carriers. The Department of Tourism and the Department of Finance have agreed to lift the carrier's tax on international carriers on a reciprocal basis, meaning that if the national flag of the foreign carrier would not impose carrier's tax on our own national airlines, then we give them the same benefit here. This is important for our tourism and this is what I am working on now. We hope to pass this when we come back next year.

Q: And you are confident that the Senate version will prevail?

FMD: That statement of Congressman Ungab, tayo po ay umaasa na mapabilis itong ating bicam at mabubuo na natin itong ating panukalang batas para po sa kalusugan ng ating mga kababayan.

Q: First time po ba yun...?

FMD: We can do it. We have no problems with that.

Q: Kakayanin mo ba 'yun, considering na pareho kayong haharap doon sa bicam?

FMD: The reality is in the budget, there is practically no difference in our versions in the House and the Senate. We did not touch the budget except for a few items which are not very substantial. We passed almost the same budget. ouse and the S It will principally be the work of the technical staff who will be reconciling and recommending to us how to reconcile these very few items. I don't expect much difficulty especially in the budget.

Q: So it is possible na sa bicam ng 2013 budget, one day bicam lang considering na wala masyadong disagreeing provision?

FMD: The technical working groups will be working on the budget principally, and since there would be no substantial differences, the formal bicameral conference committee will not be working very long.

Q: Meron kayong nire-recommend na amendments sa House version, so acceptable po ba sa kanila lahat yan?

FMD: Hindi po substantial ang mga amendments. Maliliit lang, at saka minsan realignment lang so hindi po problema.

Q: Do you expect na magkakaroon ng banggaan sa (unclear) sa bicam?

FMD: The only issue there is firstly, right now, the local manufacturers would source 15% of their raw material requirements from the output of the local suppliers. 85% would be imported. Now, the issue is should we require those who are importing to purchase the equivalent of 15% or 20% of the Virginia leaf locally? There are studies which indicate that this could be contrary to the WTO. That is the only issue.

Q: You worked so hard para maipasa itong sin tax reform bill, so how do you feel na during sa kainitan ng deliberation, there are many criticisms, especially 'yung mga raliyista.

FMD: Kasama po sa trabaho namin 'yan. I am used to this. This is not the first time that I am going through this difficult work and I am sure that your own aim and sole purpose is to do a good job for the country. We should not be scared of all of this. They have never distracted me. I was single-minded and it ended in passing the correct law. By the way, the budget, we have scheduled the signing by the President on December 20. That is our schedule on the budget.

Q: How about the sin tax bill?

FMD: Susubukan naming isabay. I Just wanted to find out what is our debt service in the budget because that will be affected by the upgrading of our credit standing. Our interest payments for 2013 is budgeted at P333.9 billion. These interest payments can go down once we reach investment grade because we have a better credit standing. It would mean that there will be excess budget for interest payments which can be used and realigned to social services. In other words, a simple credit upgrade would have positive effects, not only in investors' confidence but in actual savings in the budget. The passage of the Sin Tax Law would impact positively on our credit rating which in turn will allow savings in our interest payments, which is based on a certain rate given on how we are perceived by our credit standing.

On appointment of Leonen as Associate Justice

FMD: I am sure there are enough back-up people who can take over the negotiation (of the MILF). We always work on the principle that nobody is indispensable in this government and in this particular case, Justice Leonen was promoted as Associate Justice. He has already established the framework on the (MILF) agreement and therefore what the next negotiator will discuss is the details, but within the framework. The most critical part of the agreement has been signed and while there could be some hard bargaining, there is already a framework by which the new negotiators will be working on. Having said that, take note that Leonen can be the next Chief Justice after Sereno because he is only 49 and he will be staying longer there than Chief Justice Sereno who is already 52 and therefore will stay for 18 more years. This is the first time that you have those lengths of stint in the Supreme Court for sitting justices. You know in the United States, the SC justices sit until they conk out. Dito sa atin, until 70 years old. But since Chief Justice Sereno was appointed at 52, she will be chief justice for 18 years. Now comes Associate Justice Marvic Leonen who is 49 and will sit in the court for 21 years. After Chief Justice Sereno will retire at 70, the most senior will be Leonen. Mas maganda 'yun because there will be stability.

Of course, it affects the other's ambition or their desire to be chief justice but that is how it is. You cannot change it because they are appointed on the basis of their ability, competence and integrity. They were nominated by the Judicial and Bar Council, they were appointed by the President. The reality is that they will sit there for a very long period of time, probably they will sitting up to four presidents.

I know him to be a very competent and principled guy. He has taken positions on issues where he felt the Supreme Court or the President's position was not consistent with the Constitution. I know him very well.

On PDEA's allegations that politicians are involved in illegal drugs

FMD: What is important is that they file cases against these politicians because narco-politics is a problem that I keep on hearing and I fully endorse an investigation and filing of these cases. I assume that PDEA has evidence in their possession because otherwise they will not make these statements.

We do not need law on narco-politics because the Dangerous Drugs Act applies to everyone and this government has shown its political will to enforce the law. This should encourage PDEA to file these cases.

Hindi man ma-prevent them (from running in the elections) but at least if you will expose them then the electorate should be wary in electing them into office.

On VFA

FMD: I would like to hear the debate again on the VFA. Senator Miriam has filed a resolution. Let's hear it. I have an open mind on this. There's nothing sacrosanct about the Visiting Forces Agreement. Like any policy, like any stature, it is always subject to review. Let's hear the complaints whether these are valid or not, what are the shortcomings, let us review it.

On the proposed penal code penalizing 12-year-olds

FMD: It's not easy to come up with solutions to these problems. One of the difficulties in our present law in so far as the law enforcement is concerned is the lack of facilities wherein those minors who had transgressed the law could not be rehabilitated because of lack of facilities. So, it goes down again to lack of available fund. I do not know if changing the law is the solution. Let's see when they present this law to the Senate. All the experts will hear the resource persons and will decide accordingly.

On the RH Bill

FMD: I have expressed the view that the Senate should await how the House will act on it. Let the House act on the RH bill first then we will act on it in the Senate.

On being the campaign manager of his party

FMD: It is just unfortunate that this work ended on my lap and I could not devote time for the candidates but we will double time after we have put aside and finished our work here in the Senate.

On the 2013 budget to be used for the elections

FMD: A hallmark of this administration is transparency and in fact many of the lump sums have been disaggregated. The budgets were already given to the different agencies instead of a lumpsum. We have no fear that this will be used for the elections.

On the Iloilo convention center

FMD: The projected cost of the convention center is P450 million. The Department of Tourism and TIEZA will put in P200 million. I will fund the rest from my pork barrel. We intend to project Iloilo City and province as the convention center. We will have a modern center with a floor area of over 7,500 on a 1.7 hectare land. This will be a landmark for the city and improve our tourism arrivals in general.

On the Ampatuans running under Liberal Party

FMD: We will not allow. Sometimes, we delegate the signing of CONA. The one who signs in behalf of the local level would have to be the governor. You cannot really monitor places like Maguindanao to whom they give the certificate of candidacy. This authority is delegated to them. There are thousands of elective posts. We cannot possibly sign on the certificates of nomination and acceptance which authorizes the candidate to use the party affiliation. The certificates of nomination and acceptance are done by the local candidates in so far as local officials are concerned. Therefore, we could not possibly control what they are doing there. We should revoke whatever certificates of nomination and acceptance that may have been issued to them. I am not in favor. The reality is that you cannot monitor what they are doing there. Beyond the governorship, national headquarters ang pipirma dun, congressmen, national headquarters. You delegate to the governor in so far as the mayors and councilors are concerned. It's simply impossible for us to monitor everything.