BAT supports review of proposed 2-tier tax system


CIGARETTE maker British American Tobacco said it supports the Department of Finance’s (DOF) call for the Congressional Oversight Committee to do a full review of Republic Act 10351 or the Sin Tax Law of 2012 before the law is amended.

“We were the sole tobacco company to support the sin-tax law of 2012 which not only leveled the playing field yet allowed the Philippines government to pursue its revenue and public health goals. At the time of deliberations, we were consistently supportive of either a single tier or two tiered system. Both have a successful pedigree around the world. Our position has not shifted. If the Philippines government judges a two-tier system is appropriate to extend we have no issue with this,” James Michael Lafferty, BAT general manager, said.

“However, we should invest the time as was done on the original sin tax bill to fully vet any amendments. The newly proposed bill has two main flaws, the level of net retail price and no mechanism for the net retail price to increase in the future. Therefore, we should avoid rushing a new law into effect without a full study of both intended and unintended consequences,” he added.

Earlier last week, the House Committee on Ways and Means approved House Bill (HB) 4144, filed by Representative Eugene Michael de Vera of ABS party-list, proposing the continuation of the existing two-tier system. If passed, cigarette brands will continue to be classified as either “low-tier” or “high-tier,” and will be taxed differently.

The bill is proposing a P32 tax rate per pack for cigarettes priced at P11.50 and below and P36 per pack for cigarettes with a net retail price of above P11.50.

This bill seeks to amend Section 145 of the Sin Tax Reform Law passed in 2012 which provided for a move toward a unitary excise tax rate system for cigarettes by the year 2017 and indexed the tax rate to inflation by increasing it by 4 percent annually.

The bill seeks to address a serious concern to protect the welfare of tobacco farmers by maintaining the current excise tax system on cigarettes packed by machine at two- tiers instead of shifting to a unitary excise tax rate.

The bill earned strong opposition from farmers, tobacco manufacturers, and nongovernmental organizations and health groups.

The DOF urged the congressional oversight committee on the Sin Tax Reform Act to start reviewing the revenue and health impact of the tax rates mandated under the law to determine what measures should be undertaken by the legislature once the statute matures in 2017.


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