Local tobacco companies will be forced to shut down and lay off hundreds of workers once Congress passes a law that would impose extremely high taxes on low-priced cigarette brands, according to Blake Dy, vice-president of the Associated Anglo American Tobacco Corp.

“We are doomed,” Dy said after members of the bicameral conference committee on excise taxes agreed that 69 percent of the tax load would be shouldered by the tobacco industry and imposing only 31 percent on alcohol products. This means that for the first year of implementation, tobacco will pay an additional P23.4 billion in taxes, while alcohol will only pay P10.56 billion.

The division of the tax load is a far cry from the current setup in which the expected revenues from excise taxes are equally shared by tobacco and alcohol products. The Senate proposed a tax sharing of 60-40.

The committee also dropped the current four-tiered tax classification system for cigarettes to a two-tiered scheme in which brands priced at P11.50 per pack and below would be classified as low-priced. These brands currently taxed at P2.72 a pack would have to pay taxes of P12 a pack in 2013.

Dy said that tobacco companies will begin laying off employees in April.

“They have just signed our death warrant. Local tobacco companies would not be able to survive under this grossly inequitable, unfair system that clearly favors alcohol with reasonable increases while killing us with exorbitantly high tax hikes. I hope these solons and the anti-tobacco advocates are prepared to find new jobs for our employees because we cannot,” Dy said.

He said that doing away with cigarettes packed in sticks of 30s sealed the fate of their workers.

“We were still hoping that we could save the department and our workers by appealing to our lawmakers in the bicameral conference committee. But now we have decided to shut down the department by April next year, which means laying off people and stopping our purchase of native tobacco from Isabela province,” Dy said.