MANILA, Philippines - A measure to simplify sin taxes -- deemed key to resolving a trade dispute between the Philippines and the European Union -- will likely have to wait for the next Congress before it can be passed, a legislator yesterday said.

This comes as a liquor-exporting Western bloc asked the World Trade Organization to address its complaint against the Philippines’ allegedly unfair import taxes.

The EU claims Republic Act 9334 unfairly increased excise tax rates by 50% for imported spirits, compared to only 30% for locally made spirits. Both economies failed to come to a settlement after talks last October.

"I doubt very much [that pending bills for a unitary sin tax system will be passed before the May elections]. We have very limited time and we’re on focused on passing the budget," House Majority Leader and Iloilo Rep. Arthur D. Defensor, Sr. said in a telephone interview yesterday.

Bills for such an amendment are currently waiting consolidation at the House ways and means committee.

The legislative calendar shows that Congress has until this Friday before it adjourns for the Christmas break. Next year it will have just roughly three weeks of sessions before the national elections and another two weeks from late May to June before the 15th Congress takes over.

The Finance department, nevertheless, renewed calls for lawmakers to put in place a unitary tax system for alcohol and cigarettes. A unitary sin tax system is now "extremely important" in light of the trade dispute, Finance Secretary Margarito B. Teves said in a text message yesterday.

House Bill 3787 authored by Quezon Rep. Danilo E. Suarez would help resolve the dispute only if "the bill becomes a law", Finance Undersecretary Finance Undersecretary Gil S. Beltran said in a separate text message.

"Equalizing rates for all liquor whether from tropical or nontropical raw materials" would likely solve the dispute, Mr. Beltran said.

HB 3787 remains at the committee level and is awaiting consolidation with similar bills numbered 3759, 3917 and 2551.

In the meantime, the current tax system has been tagged as "discriminating against imported spirits and is thereby in clear breach of international trade rules", the European Commission said in a statement late on Friday, formally requesting the WTO to form a judging panel on the matter.

"...But we still hope the Philippine Government would remedy the situation without waiting for the completion of WTO dispute settlement procedures," Benita Ferrero-Waldner, the new European trade commissioner, said in the same statement.

The Philippine delegation to the WTO has opposed the panel request, a move that is allowed under dispute procedure rules.

The EU will have to request for a panel again for one to be formed.

"The Philippines will assert all its legal rights and oppose the EU request for the establishment of a panel at the upcoming WTO dispute settlement board meeting," Ambassador Manuel A.J. Teehankee, the country’s permanent representative to the WTO said in a statement late on Friday.

In the past, WTO panels on liquor tax disputes have decided in favor of the exporting country. In October, however, the EU and Uruguay reached an out of court settlement over whisky taxes after the developing country promised to use a unitary tax system, earlier reports show.

The Western bloc complained that from 2004 to 2007, EU exports of spirits to the Philippines fell from around 37 million euros to 18 million euros. -- JADH