A unitary tax rate for all cigarette brands is unreasonable, House ways and means committee chairman Dakila Cua of Quirino said on Thursday.
Cua was referring to House Bill (HB) 4144, which seeks to retain the two-tier structure at present as provided under the sin tax law enacted in 2012.
Also under HB 4144, the tax rate for the cheaper brand of cigarettes will be pegged at P32 per pack while the higher-end brands will be slapped a P36 tax rate per pack–higher than the scheduled P30 unitary tax rate per pack.
Under the sin tax law, cigarettes with a net retail price of P11.50 per pack have an excise tax rate of P25 per pack while those priced higher than P11.50 have an excise tax rate of P29 per pack.
“It’s like having an imported Mercedes Benz and an owner-type jeep. Would you charge them with the same amount of taxes? The local manufacturer of owner-type jeep will lose his means of livelihood, which is similar to what the Filipino tobacco farmers stand to suffer if the sin tax law would not be amended,” Cua said.
“Our goal here is to find a balance between ensuring that our farmers’ means of livelihood is sustainable and increasing government revenues for healthcare,” he added.
Since the sin tax law was enacted in 2012, government records have shown that 4.5 million people have stopped smoking.
House Deputy Minority Leader and Rep. Lito Atienza of Buhay party-list agreed with Cua.
“That [unitary tax]would kill the local [farmers]. While we promote the good health and favor increasing taxes, let us not be unfair to our local industries,” Atienza said in a statement.
But for health groups Primary Care Coalition, Action on Smoking and Health, Framework Convention on Tobacco Control Alliance Philippines, New Vois Association of the Philippines, Health Justice Philippines, Womanhealth Philippines and Action for Economic Reform, maintaining the two-tier tax system protects the interests of the tobacco industry and will just kill the health and revenue gains of the sin tax law.
HB 4144, authored by Rep. Eugene de Vera of ABS party-list, was filed on October 19 or before the session went on break on October 21.
It was referred to the House Committee on Ways and Means on November 7 upon resumption of session.
The first committee hearing on the bill was held on November 28 and was immediately approved without amendment during the second hearing on December 5 and submitted to the rules committee on the same day.
Dr. Antonio Dans, Academician of the National Academy of Science and Technology, warned that at least 10 percent of smokers would simply switch to low-priced cigarettes if the two-tier system is maintained.
“Instead of quitting, smokers could end up consuming up to 50 percent more of the cheap cigarettes,” Dans said in a statement.
President Cristina Morales-Alikpala of Action for Economic Reforms expressed fear that the two-tier tax system would make it easy for tobacco manufacturers to produce cheap brands to avoid higher taxes.
“A higher unitary tax rate will protect and save more lives, and significantly reduce downshifting to cheaper brands. HB 4144 will be bad for both health and revenues while HB 4575 will further strengthen the sin tax law; HB 4575 is estimated to generate P20 billion more revenues compared to HB 4144,” Alikpala added.