Senate to deliberate on tobacco excise tax hike Monday

Senate Bill 1599, filed by Sen. Emmanuel “Manny” Pacquiao, seeks to increase the current cigarette tax rate from PHP30 per pack to PHP60 per pack. This is aside from the annual increase of 9 percent from the current 4 percent increase in excise tax per year. (File Photo: Manny Pacquiao/Facebook)

MANILA — The Senate ways and means committee will hold its next hearing on proposals seeking to increase the excise tax on tobacco products on Monday (February 4) at 11 a.m.

Senate Bill 1599, filed by Sen. Emmanuel “Manny” Pacquiao, seeks to increase the current cigarette tax rate from PHP30 per pack to PHP60 per pack. This is aside from the annual increase of 9 percent from the current 4 percent increase in excise tax per year.

Senator Sonny Angara, committee chairman, said the panel would look into the capacity of the Department of Health (DOH) in implementing the universal health care (UHC) as a basis of the final amount or rate for the tobacco taxation.

“We’re looking at it not just from revenue side but from the spending side. We don’t want to waste funds. Our government agencies may just be asking for funds but can’t spend these,” Angara said in a statement Friday.

Angara is targeting to sponsor the measure on the plenary before Congress adjourns its session next week.

“Hopefully we can sponsor it by Wednesday… The goal is to sponsor it before Congress (adjourns),” Angara said.

However, for Senate President Vicente Sotto III, there is “no chance” next week for the tobacco tax bill to reach plenary, noting that it could be tackled once sessions resume.

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.

Health Secretary Francisco Duque earlier said smoking prevalence in the country would be lowered from 21.6 percent of the population down to a target of 15.7 percent.

Based on DOH’s latest estimates, tobacco taxes pegged at PHP90 per pack could avert 1 million tobacco attributable deaths.

Also in December 2018, 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.

Groups oppose tobacco excise tax hike

Several groups appealed to senators against further increasing the tobacco excise tax and said grave consequences outweigh any gains.

Federation of Philippine Industry Chairman Jesus Arranza said their group does not support any more tax increases for tobacco, citing an Intellectual Property Office of the Philippines (IPOPHL) report that an estimated PHP20 billion worth of cigarettes were seized in 2018.

Arranza said the proliferation of these non-taxed items were 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.

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

Distor said farmers cannot take any more increases. “We are struggling and a lot of us already lost their livelihood.”

“Nagbabayad kami at ang aming industriya ng tamang buwis. Hindi bababa sa PHP100 bilyong kada taon ang nakokolekta ng gobyerno sa amin. Higit sa binabayad ng ibang industriya. (We together with the industry pay our fair share of taxes. The government collects no less than PHP100 billion. More than any other industry),” the PTGA said.

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

“From 2013 to 2018, there has been seven consecutive increases on tobacco products. No other product has been taxed these many times as tobacco. Not even alcohol, mining or gambling,” Pro-Yosi President Anton Isreal 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 northern Philippines said the almost 3 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% 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 expressed concern on its impact to the tobacco farmers. Misamis Oriental is one of the provinces in Mindanao that grows tobacco.