Tobacco growers worried by latest tax hike bill

Based on data from the National Tobacco Administration (NTA), tobacco production went down from 68 million kilos in 2013 to 48 million in 2017. (Shutterstock Photo)

MANILA — The Philippine Tobacco Growers Association Inc. (PTGA) on Tuesday expressed grave concern over the proposed increase in excise taxes on tobacco, saying the battery of taxes is killing the local industry.

In a statement sent to the Philippines News Agency, the PTGA said cigarette taxes “have gone up seven times in the last five years. This has directly impacted our production and caused the displacement of a lot of farmers.”

Higher prices have led to a lot of counterfeit cigarettes and these are coming mostly from China and do not use Philippine tobacco,” it added.

Based on data from the National Tobacco Administration (NTA), tobacco production went down from 68 million kilos in 2013 to 48 million in 2017.

PTGA argued that the local tobacco industry has paid some PHP126 billion to the Bureau of Internal Revenue (BIR) in 2017 alone. But despite their enormous contribution to government’s coffers, tobacco farmers are barely surviving.

The group said that the increases in prices of tobacco products have also contributed to the inflation surge.” These cigarette prices have contributed to the spike in inflation to all-time highs. Our families are barely coping,” the PTGA said.

President Rodrigo R. Duterte has approved the proposal of two agencies to raise excise tax on alcohol and tobacco products to fund the government’s Universal Health Care (UHC) program.

Presidential Spokesperson Salvador Panelo said the President announced his decision during Monday’s 33rd Cabinet Meeting in Malacañang.

“The Chief Executive likewise approved the proposal of the Department of Health and the Department of Finance to increase the excise tax on alcohol and tobacco products,” Panelo said in a statement.

“This is a key public health measure to reduce deaths and disabilities due to tobacco and alcohol consumption and, at the same time, a revenue measure to fund the universal health care program,” he added.

In December last year, Finance Secretary Carlos Dominguez III pushed for the increase in the current tobacco excise tax rates to levels that would effectively curb smoking and also help supplement funds for the UHC program.

In the same month, the House of Representatives approved House Bills (HB) 8677 and 8618, which increase the tax on cigarettes and alcoholic drinks, respectively.

HB 8677 seeks to increase excise tax rates for tobacco by PHP2.50 every year, starting July 2019 until 2022.

Under the measure, cigarette excise tax rate will be raised to PHP37.50 per pack by July 2019, PHP40 for 2020, PHP42.50 for 2021, and PHP45 for 2022. The rate would be raised 4 percent every July annually, starting 2023.

HB 8618 aims to raise excise taxes on distilled spirits, wines, and fermented liquors.

Under the measure, the current 20 percent ad valorem tax imposed on distilled spirits shall be increased to 22 percent, while specific tax rates per proof liter of PHP30, PHP35, PHP40, PHP45 shall be imposed from 2019 to 2022. The specific tax rate shall be increased by 7 percent annually, starting 2023.