Position Paper of NBDB on the Proposed Repeal

Note: Copied from the NBDB website and reposted here primarily for information only of librarians who will be similarly affected by the proposed repeal of the Section 12 of RA 8047 and "to stay vigilant and continue speaking out against it.". Please refer to the original position paper for any updates/correction, if any. Thanks.

POSITION PAPER OF THE NATIONAL BOOK DEVELOPMENT BOARD ON THE PROPOSED REPEAL OF SECTION 12  OF REPUBLIC ACT NO. 8047 OR THE BOOK PUBLISHING INDUSTRY DEVELOPMENT ACT 

BACKGROUND

The “Tax Reform for Attracting Better and High-quality Opportunities,” or “TRABAHO” under House Bill No. 8083 has just been passed in the House of Representatives. Now pending before the Senate is the “Corporate Income tax and Incentives Reform Act” under Senate Bill No. 1906.

Both Bills propose, among others, to repeal Section 12 of R.A. 8047 which provides tax incentives for book development.

Section 12 of R.A. 8047 which consists of two (2) tax incentives expressly provides the following:

“SECTION 12. Incentives for Book Development. Persons and enterprises engaged in book publishing and its related activities duly registered with the National Book Development Board shall be entitled to the applicable fiscal and non-fiscal incentives as provided for under Executive Order No. 226, otherwise known as the Omnibus Investment Code, as amended, subject to the qualifications and requirements set by the Board of Investments (BOI); Provided, That book development activities shall always be included in the Investment Priority Plan (IPP).

“In the case of tax and duty-free importation of books or raw materials to be used in book publishing, the Board and its duly authorized representatives shall strictly monitor the quality and volume of imported books and materials as well as their distribution and the utilization of the said imported materials.

“The Board shall also recommend to the proper prosecuting agencies any violations of the conditions of the duty-free importation. Books, magazines, periodicals, newspapers, including book publishing and printing, as well as its distribution and circulation, shall be exempt from the coverage of the expanded value added tax law.”

While the National Book Development Board (NBDB) recognizes the intention of the honorable proponent to expand the tax base , repeal of tax incentives under the abovementioned law disregards the long-established principle embodied in the Florence Agreement.

Hence, NBDB respectfully opposes the passage of the Bill insofar as the proposed repeal of the tax incentives provisions on book publishing is concerned.

DISCUSSION

The exemptions from tax and customs duty importation of books or raw materials for book publishing and from the coverage of the e-vat should not be repealed.

The National Book Development Board, being the government arm in the development of the book publishing industry in the country, supports its stakeholders more specifically through the enjoyment of applicable fiscal and non-fiscal incentives under the Omnibus Investment Code of 1987, and the e-vat under the National Internal Revenue Code (NIRC), as amended.

Violation of the Florence Agreement

Senate Bill 1906 and House Bill 8083 run in conflict with one of the objectives of the National Book Policy under the Book Publishing Industry Development Act which is to reaffirm and ensure the country’s commitment to the UNESCO principle of free-flow of information and other related provisions enshrined in the Florence Agreement and in other similar international agreements .

When the Philippines signed the UNESCO Florence Agreement in 1952, the Philippines has moved towards the abolition of trade barriers that impede free-flow of information between and among contracting states.

The Florence Agreement provides further that the contracting States undertake the following:

“(a) Continue their common efforts to promote by every means the free circulation of educational, scientific or cultural materials, and abolish or reduce any restrictions to that free circulation which are not referred to in this Agreement;

(b) Simplify the administrative procedure governing the importation of educational, scientific or cultural materials;”

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It can be observed from the foregoing obligations that the Philippines is committed to abolish or reduce any restrictions to the free-circulation of materials. Imposing certain conditions on the items that are supposed to be enjoyed unconditionally will violate the said obligations.

The general provisions on the availment of tax incentives under this bill directs the Investment Promotion Agencies (IPA) to apply for evaluation and review by the Fiscal Incentives Review Board (FIRB) . It would negate the inclusion of book development activities in the Investment Priority Plan (IPP) and will eliminate the legal basis for support of persons and enterprises engaged in book publishing and its related activities.

Lost of Opportunities in the Local Book Printing Industry

The Tax and Duty-Free Importation (TADFI) of raw materials is open to all NBDB-registered book publishers, book printers, and book industry associations (collectively known for this purpose as “importers”). These clients resort to the importation of raw materials for book publishing such as book covers, other types of papers, and inks in order to:

1. acquire raw materials at a cheaper price;

2. lower the total cost of book production; and

3. acquire raw materials which are not locally available.

Removal of the incentives would force the book publishers to print/publish their books abroad only to be imported thereafter and to be taxed duty-free. As a business decision, this can be logical. However, the local book printing industry would be vulnerable and would lose opportunities.

Unaffordability and Inaccessibility of Books

The NBDB is mandated by law to ensure, among others, affordability and accessibility of books for all segments of the population, and to promote readership.

In the 2017 Readership Survey which was recently conducted by the NBDB in partnership with the Philippine Statistical Research and Training Institute (PSRTI), records show the vital role of books in the education and learning of both young and adult readers. This result reveals that most of the respondents depend on reading as a tool in their respective professional development and goal.

Another aspect of the Survey reveals that majority of the respondents, both young and adult, read storybooks and picture books and are willing to spend on books as much as P199.00 pesos.

Section 12 of R.A. 8047 consists of two (2) tax incentives as follows:

1. Tax and duty-free importation of raw materials for book publishing; and

2. Exemption from the expanded value-added tax.

Should this provision be repealed, the customs duty paid in the importation of raw materials and the amount incurred in the payment of the value-added tax would have to be added to the cost of book production, which costs would eventually be passed on to buyers by adding the cost to the book price upon reaching the market. This scheme will greatly affect the willingness and capacity of readers to spend on books considering its high cost.

PRAYER

To give life and meaning to the Constitutional pronouncement in the promotion of quality education , various statutes affecting the book publishing industry as a whole should preserve and continue to support the free-flow of information pursuant to the Florence Agreement and its protocol.

Thus, the NBDB respectfully requests the Honorable Members of the Senate to consider book development activities in the Strategic Investments Priority Plan to the passage of the “Corporate Income Tax and Incentives Reform Act,” by preserving the tax incentives under Section 12 of R.A. 8047.

Respectfully submitted,

(signed)

FLOR MARIE STA. ROMANA-CRUZ

Chairperson

National Book Development Board

Unit 2401 Prestige Tower, F. Ortigas, Jr. Road,

Ortigas Center, Pasig City

Copy furnished:

Sen. VICENTE C. SOTTO III
Office of the Senate President
Senate of the Philippines
Pasay City

Sen. PAOLO BENIGNO AGUIRRE AQUINO IV
Chairperson, Committee on Education
Senate of the Philippines
Pasay City

Sen. JUAN EDGARDO MANALANG ANGARA
Senate of the Philippines
Pasay City

Atty. RODELIO T. DASCIL
Director General
Senate Tax Study Research Office
Room 524 Senate of the Philippines
Pasay City

PDI Editorial : TRAIN 2 to tax books?

Fulltext of the Philippine Daily Inquirer Editorial of 14 September 2018. Thank you PDI.

Reposted here the fulltext for wider dissemination to all concerned stakeholders in our profession and related fields in order for our timely action to this matter and  "to stay vigilant and continue speaking out against it."

To view the reader's comments/sentiments and or updates/corrections (if any) posted to this editorial, please see the original editorial posted at the PDI website or simply click the links provided above. 

EDITORIAL

September 14, 2018

TRAIN 2 to tax books?

Various sectors have reacted with alarm to what some alert citizens have discovered in the pages of Senate Bill No. 1906, filed by Sen. Vicente Sotto III. SB 1906, first called “TRAIN 2,” has been repackaged as “Trabaho” (Tax Reform for Attracting Better and High-quality Opportunities) to disassociate it from the unpopular TRAIN, which has been blamed for the inflation and painful economy now besetting the country. The House of Representatives passed its counterpart bill to SB 1906 this week.

Sotto’s measure contains a provision that seeks to repeal Section 12 of Republic Act No. 8047, or the Book Publishing Industry Development Act enacted in 1995, which exempts books, magazines, periodicals, newspapers, including book publishing, printing, distribution and circulation, from the expanded value added tax. Should the provision be retained and enacted into law, such goods and services will be taxed. The prices of books, including textbooks and raw materials for publishing, are likely to increase as a result.

The local book community is up in arms over the provision, warning that it would kill the country’s reading culture by making books even less accessible and affordable.

“You can tax cigarettes to discourage smoking. You can tax sugar for healthy living. But taxing books will not promote reading,” said Clem Malubay, owner of the independent Aklatan Bookstore and author of an online petition against the repeal in change.org.

Filipino writing organizations Linangan sa Imahen, Retorika, at Anyo  and the Unyon ng mga Manunulat sa Pilipinas, in their joint petition on Facebook, said: “Ang libro ay hindi lamang karaniwang libangan o aliwang maaaring patawan na lamang ng buwis, kung nanaisin. Hindi ito bisyo, tulad ng maraming ibig buwisan ngayon. Isa itong daan patungo sa pagkatuto, paglikha, at pagkilala sa sarili at daigdig. (A book is not a common form of entertainment that should be taxed at whim. It is not a vice, unlike other goods that are being taxed. It is a means of learning, of creating and discovering the self and the world).”

Those who have signed the petitions raise valid questions: Why tax educational materials, of all things? Why turn book ownership, in effect, into a privilege for a few?

Contrary to observations that Filipinos no longer read books given the current dominance of social media and television as sources of information, huge turnouts at book fairs like the Manila International Book Fair and Big Bad Wolf show otherwise.

A survey released by the National Book Development Board in 2012—the most recent data available—showed that “there still exists an enormous market in the Philippines for producers of all sorts of reading materials,” with 88 percent or almost 50 million Filipino adult readers. This figure, however, represented a slight decline from 94 percent in 2003 and 92 percent in 2007.

Those numbers could only further decline with the proposed book tax, and eventually kill the publishing industry.

This is not the first time that the government has attempted to tax books. Eight years ago, the Bureau of Customs imposed duties on a shipment of the popular young adult novel “Twilight,” causing a domino effect on other book imports. The book community loudly protested, citing the Unesco Florence Agreement of 1950, which binds signatory states, including the Philippines, not to impose customs duties on imported educational, scientific and cultural materials. The strong lobby managed to convince the administration of then President Gloria Macapagal Arroyo to scrap the customs duties.

Responding to the growing concerns over the problematic TRAIN 2 provision, Euvimil Nina Asuncion, Department of Finance legal and communications director, has reached out to Malubay through Aklatan’s Facebook page. She gave the assurance that enough legal safeguards are in place to ensure that books will remain exempt from tax and customs duties.

Such assurances are welcome, but not enough. Until the worrying provision is definitively stricken out of the final draft of the tax bill, the reading public has to stay vigilant and continue speaking out against it. Taxing books and making educational materials more expensive—rendering them out of reach, eventually, to many ordinary Filipinos—is antidemocratic, an assault on the essential republican ideal of an informed and critical citizenry.