The Philippine Tobacco Institute (PTI), an association of cigarette manufacturers, said it is amenable to “a reasonable” price hike in the government’s tax stamps.
Rodolfo F. Salanga, PTI president said the Bureau of Internal Revenue (BIR), APO Production Unit Inc. (APO) and the tobacco industry will meet today, March 5, to settle the planned eight centavo increase in the cost of each cigarette tax stamp.
But Salanga maintained that the eight centavo increase proposal by APO, the agency mandated to print government security-sensitive documents, is “excessive.”
Salanga explained that if APO’s plan is adopted, it will raise the cost of cigarette stamps from the current 15 centavos apiece to 23 centavos, or more than double the actual printing cost of only 11.37 centavos.
The PTI is standing pat with its position for a two-centavo increase, the same amount with the last increase in 2018 from the initial price of 13 centavos in 2014, the official said.
Salanga said at the current manufacturers’ cost of 15 centavos, APO has already a 30 percent margin and “raising the cost to 23 centavos would effectively give APO a 102 percent net profit.”
He also pointed out that the industry has consistently increased excise tax payments to the government from ₱33 billion in 2012 to ₱148.5 billion in 2020, a 350 percent increase that enabled government to fund its developmental projects as well as the Universal Health Care (UHC).
“The industry has been battered with annual excise tax increases and production volume is down by half from 120 billion sticks in 2012 to 60 billion sticks last year, thus, hitting us with another blow to raise the cost of the tax stamps, would be too much,” Salanga said.
He added “we have immensely contributed to the government” and imposing a steep price on the cost of the tax stamp is too much to bear and would only “bleed” the industry further.
A March 15, 2021 letter to APO Chairman and President Michael J. Dalumpines, Salanga decried the increase as “unconscionable and excessive.”
The PTI stressed that APO is not a revenue generating government agency and its “monopoly” of producing the tax stamps is for regulatory purposes and not to raise revenues.
“We wish to emphasize that the intent for the internal revenue stamp is to ensure the collection of excise taxes. APO should not opportunistically use such requirement to collect internal revenue stamp printing cost with a target of more than 102 percent net profit of its actual cost,” PTI wrote.