Farmers, stakeholders oppose tobacco sin tax


Local tobacco farmers and stakeholders expressed strong opposition to the proposed bill that seeks a huge increase in the tobacco sin tax.

In a statement, the PhilTobacco Growers Association and Philippine Aromatic Tobacco Development Association said that House Bill 4144, authored by ABS Partylist Representative Eugene Michael de Vera, would introduce two increased tax tiers, one at P32 per pack and the other at P36 per pack.

The proposed bill also seeks an annual increase of 5 percent on these rates.

The current Sin Tax on tobacco (R.A.10351) sets a unitary rate of P30 per pack in 2017, with an annual 4 percent adjustment thereafter.

“Why are they proposing to hit tobacco again, even before another big 20 percent excise tax increase in January next year, and we don’t even know what the impact of that will be,” said Saturnino Distor, PTGA leader.

“Tobacco farmers are struggling with falls in demand for tobacco because of the huge 340 percent excise tax increases introduced in 2013, with annual compound increases of 20 percent or more ever since worsening the situation,” Distor added. “Why is it that only tobacco being targeted and not other excisable goods?

The official said that tobacco excise taxes contributed around P100 billion in 2015, up from P32 billion in 2012, and are now constitute more than two-thirds of the Sin Tax take.

“We are giving more than our fair share of the contribution,” Distor said.

“This Bill is being rammed through Congress and we have never been asked for our opinion. The whole process is a sham and we call on the House leadership to seek proper consultation and a complete impact assessment before proceeding with it,” he added.

The Ways and Means Committee is scheduling another hearing on the measure on Monday, December 5 a week after its first hearing on November 28.

Earlier, the Action for Economic Reforms (AER) said HB 4144 aims to prevent the tobacco tax from becoming a unified tax rate on tobacco products, in the guise of protecting the welfare of tobacco farmers.

“HB 4144 runs contrary to the spirit of the Sin Tax Law. A unitary tax system is designed to optimize revenue collection and to ease tax administration,” said Filomeno Sta. Ana 3rd, AER coordinator and Madeiline Joy Aloria, AER researcher.

AER said that the lower tax HB 4144 proposes is P32 per pack for cigarettes that have a net retail price (defined as the price that excludes the excise tax and the value-added tax) of P11.50. The higher tax is at P36 per pack for cigarettes that have a net retail price above P11.50.

“It is plain common sense to conclude that government will be earning more revenue from a single rate of P36 regardless of the price of cigarettes,” AER said.

“It must be stressed nevertheless that the rate increase that HB 4144 is proposing is ridiculously low, taking into consideration the question of affordability, specifically increase in income and inflation. Hence, the rate of P32 to replace the rate of P30 must be rejected,” they said.

“In terms of simplicity, the unitary tax, to quote the World Bank (2016), addresses administrative difficulties of classifying cigarettes by declared value and focus more on observed volumes. Having different rates makes the system more vulnerable to tax evasion and corruption,” AER added.


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