Agri chief opposes 2-tier excise tax on cigarettes

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Agriculture Secretary Emmanuel Piñol vehemently opposed the legislation imposing a huge increase in cigarette excise tax, saying the two-tier scheme would only bring hardship to tobacco farmers who are still reeling from the previous tax hike.

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“The DA (Department of Agriculture) supports the position of the tobacco farmers,” Piñol said, saying he will direct the National Tobacco Administration to explain why it is taking a position contrary to stakeholders’ stand on the matter.

The DA chief was reacting to reports quoting the NTA, an attached agency of the DA, as supporting House Bill 4144, which seeks to impose a higher tax on cigarettes by amending provisions of the Republic Act of 10351 or the Sin Tax Reform Law of 2012.

Besides the NTA, farmer leader President Saturnino Distor was also quoted in media reports as having thrown his support behind HB 4144 in his capacity as the Pangasinan Chapter President of the National Federation of Farmers Association and Cooperatives. (NAFTAC).

Distor has denied the reports saying, “I also condemn the unauthorized use of my name and the attribution of statements that are contrary to my views. This is the product of malicious minds serving vested interests.”

At present, the government imposes a unitary sin tax rate of P30 per pack of cigarettes regardless of brand, with a yearly 4-percent adjustment, as indicated in the sin tax reform law.

Finance Secretary Carlos Dominguez 3rd earlier opposed the amendments to the law, urging lawmakers to allow the six tax on tobacco products to run its course.

Dr. Eric Tayag, spokesperson of the Department of Health, said the proposal to amend the six tax law was a “five-step-backward” in the fight against smoking.

By a 176-30 vote, the House approved on third and final reading the controversial bill.

Public health think tank HealthJustice Philippines accused legislators of railroading HB 4144 to allow cigarettes to remain dirt cheap in the Philippines, contrary to the Philippine health agenda and Duterte’s promise of a Smoke-Free Philippines.

May Fernandez-Mendoza, president of HealthJustice, said House Bill 4144 was approved on second reading without any amendment on December 5.

It sought a P7 increase in excise taxes to P32 and P36 from the current P25 and P29, with marginal increases of 5 percent per year instead of marginal increases of 4 percent per year based on RA 10351, the current sin tax law which is scheduled to bring the excise tax on cigarettes to a single rate of P30 in 2017.

The bill was sponsored by Rep. Eugene de Vera of ABS Partylist and supported by all those in the super majority.

“There is an illusion of significant increase in taxes but in reality, this is a ruse to preempt ideal taxes for health that President Duterte, being a strong tobacco control advocate, is capable of calling for,” Mendoza said.

“If this is made in line with the Philippine Health Agenda to reduce the harming effects of tobacco, tobacco taxes should be at least P40, hence significant enough to discourage smoking and bring Philippines out of the category of having the one of the cheapest cigarettes in the world. It should also call for significant annual increases,” she added.

In 2010, a HealthJustice study projected that, in order to achieve a periodic 10 percent reduction in smoking prevalence or save 200,000 lives annually and reducing the number of smokers by 500,000a year, taxes should have reached a unitary rate of P30 by 2014, to be increased annually based on inflation and income growth.

“However, the deliberation of the Sin Tax bill went through a lot of compromise due to tobacco industry lobby, and was watered down such that the rate of P30 would take effect only in 2017. To make up for the lost lives, we propose a minimum of P40 excise tax per pack as a starting point in 2017,” Irene Reyes of HealthJustice noted.

Mendoza pointed out that incremental revenues from any tobacco tax increase should go back to health in the form of health promotion to strengthen the communities’ capacity to undertake health initiatives and promote healthy cities.

“Investments must be made to prevent Filipinos from getting sick,” Mendoza added.

“Price of cigarettes in Philippines is cheap. If we want to protect the youth, we need to break the P100 per pack price barrier,” said Dexter Galban of One for Nursing Empowerment, a group of nursing students from Philippines universities.

Internal tobacco industry documents show that the tobacco industry views and targets the youth as replacement smokers.

According to a survey conducted by HealthJustice, the youth will stop smoking if prices of cigarettes are at P5-P10 per stick or P100-P200 per pack. A pack of cigarettes sells on average at P36-P65 per pack in the Philippines while it is between P100-P450 in countries that are committed to deter smoking, such as Thailand, Singapore, Australia and USA.

Smoking has also been established as contributing to poverty. A 2008 DOH study shows that the total economic costs for the four smoking-related diseases were estimated at P188 billion a year. The total collection from tobacco products is P120 billion a year and P75 billion on average goes to health.

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3 Comments

  1. Charity Omayan on

    These two-tiered system allows for these companies to open to the market cheaper cigarettes which means easier access to it by the poor and the youth.

  2. Originally this was a health bill, at least that’s what they said when they passed the STL. These brainless lawmakers seems to disregard the fact the expensive or not, cigarettes have the same effect on our health.

  3. Eloisa Concepcion on

    By passing this bill, our esteemed and honorable (pwe!) TONGressmen are enabling tax evaders like Mighty COrp, who also happened to back the said bill, o continue, guess what, evading taxes. Brilliant!