Groups warn ‘grave consequences’ of higher tobacco tax

Published February 3, 2019, 12:00 AM

by manilabulletin_admin

By Chino S. Leyco

Some consumer groups, local officials and business leaders along with the tobacco farmers cautioned the Senate that the proposed measure seeking to raise sin taxes on cigarettes would have “grave consequences.”

According to the groups that opposed another round of cigarette tax increase, any gains from the planned P60 to P90 excise tax on tobacco products would be “outweighed” by these grave consequences.

The groups particularly cited the Intellectual Property Office of the Philippines (IPOPHL) report last week that an estimated P20 billion worth of cigarettes were seized in 2018 and Federation of Philippine Industries Chairman Jesus Arranza said this is proof why they do not support any more tax increases for tobacco.

According to the IPOPHL, cheap fake cigarettes were the most smuggled goods in 2018 and Arranza explained that the proliferation of these non-taxed items was due to high prices driven by taxes.

“We fear that the high tax proposals under Senate Bills 1599 and 1605 could aggravate the situation and lead to even higher incidence of illicit trade,” Arranza said in a position paper submitted to the Senate Ways and Means Committee chaired by Senator Sonny Angara.

PhilTobacco Growers Association (PTGA) President Saturnino Distor said taxes on tobacco products have been increased seven times already in the last five years.

This is the most for any industry and Distor said farmers cannot take anymore
increases. “We are struggling and a lot of us already lost their livelihood.”

The consumer group Pro-Yosi also wrote Angara’s committee to point out that they support the Universal Health Care (UHC) program of the government but they are averse to raising more money for the UHC from tobacco.

“From 2013 to 2018, there have been seven consecutive increases on tobacco products. No other product has been taxed this many times as tobacco. Not even alcohol, mining or gambling,” Pro-Yosi President Anton Israel said.

“The tobacco industry also deserves equal protection under the law. Tobacco consumers are also taxpayers who deserve the same protection as those who consume alcohol or sweetened beverages,” Israel said.

In another position paper submitted to Angara’s committee, governors from tobacco producing provinces in the north said the almost three million Filipinos dependent on the tobacco industry are suffering from the adverse impact of higher taxes.

“From 2013, tobacco crop production has dropped by more than 20 million kilos or roughly 40 percent of the annual yield. This represents a significant drop in the household income of tobacco farmers,” the governors said.

The local chief executives who signed included Ilocos Norte Gov. Imee Marcos, Ilocos Sur Gov. Ryan Singson, La Union Gov. Francisco Emmanuel Ortega and Isabela Gov. Faustino Dy.

Misamis Oriental Gov. Vicente Emano said he is not opposed to the imposition of tobacco excise tax per se but considering the series of increases in the past years, he is very much concerned on the impact to the tobacco farmers.

Misamis Oriental is one of the provinces in Mindanao that grows tobacco.

“It is inevitable that another round of increase on tobacco excise tax would pose a financial challenge to the tobacco industry and we are afraid that it will directly affect the livelihood of our tobacco farmers in the event that tobacco factories may choose to close down due to financial difficulties,” Emano said.