Congress urged not to rush hike in sin tax

By Chino S. Leyco

The Federation of Philippine Industries, Inc. (FPI) is urging Congress not to rush the proposed measure seeking to increase the levies on cigarettes amid the proliferation unlicensed tobacco manufacturers in the country.

In a letter to Senate Ways and Means Committee dated January 24, 2019, Jesus Lim Arranza, FPI chairman said the planned increase in tobacco excise tax could “aggravate” the rampant illicit cigarette trade which government authorities uncovered after their series of raids.

Currently, there are Senate bills seeking to raise tobacco excise tax rate by another P30 or P60 per pack. Once approved and signed into law, the levy imposed on tobacco products for every package would reach P60 or P90 from present P30.

"We do not support rushing the passage of the subject bills that will increase taxes on tobacco product at a time when rampant smuggling of these products continue,” Arranza’s letter to Senator Juan Edgardo Angara, chair of the Senate ways and means committee.

Arranza explained that the lawmakers has to consider the Department of Finance (DOF) admission that "the successive tax increase on tobacco products have already emboldened criminal elements to smuggle in or manufacture cheaper illegal cigarettes.”

According to Arranza, FPI, an advocate against illicit traders, estimated that the government is losing over P200 billion in duties and taxes each year owing unabated smuggling.

"We fear that the high tax proposals under Senate Bill Nos. 1599 and 1605 could aggravate the situation and lead to even higher incidence of illicit trade,” Arranza said.

"We respectfully urge the Senate ways and means committee to allow the congressional oversight committee on tax reform to assess the current excise tax framework before new rates are contemplated,” he added.