MANILA: Malacañang stood pat yesterday on the government’s proposed sin tax bill that is expected to collect some P40bn ($900m) in revenues, saying tobacco groups have no right to complain since they always make a killing regardless where their market is.
“Tobacco companies remain profitable wherever they are,” presidential spokesman Secretary Edwin Lacierda said, insisting that prices of local cigarettes remain the lowest in Asia.
Lacierda was reacting to paid newspaper advertisements calling President Aquino to stop the 1,000 percent increase in taxes, saying the figure was “too much.”
“That is incorrect. The appearance of that ad would imply that upon the passing of the sin tax bill into law the increase will be immediately 1,000 percent,” he said, noting that current rate is P2.72 ($0.06), followed by P12 ($0.27) in 2013, P22 ($0.48) in 2014 until it reaches P32 ($0.71) in 2016. That’s hardly 1,000 percent,” he said.
Even if the proposed new tax rates get approved, he said that local cigarettes “would still be among the lowest (priced) in the region,” where the current P15 ($0.33) per pack would only reach P26 ($0.57) once the Senate bill is enacted into law.
“In Thailand, a pack of the lowest-priced brand would be P72 ($1.6), and in Vietnam it will be P36 ($0.8). In Indonesia, the lowest price would be P48.50 ($1.07). So, obviously it’s still going to be the lowest in the region,” Lacierda asserted.
The Philippines, being a signatory to the World Health Organisation framework on tobacco control, will have to comply with the treaty where 177 countries have recommended a 70 percent excise tax on tobacco products.
“We are now acting on it and we are increasing it to about 60 percent. Not all countries have reached 70 percent. But at least, with the sin tax measure, we are at least able to be closer to the recommended 70 percent excise tax,” he said.
Lacierda said that if the government were to pass the sin tax bill, the tax burden on the retail price would only amount to 60 percent.
“So it is even less than what is being proposed by the WHO convention on tobacco control. In some other countries, it’s already at 75 percent of retail price,” he said, adding that 15 percent out of the 60 percent of the revenues that will be generated “will be devoted to the safety nets.”
“So if it is at P40bn ($900m), assuming that we are able to generate a revenue of P40bn ($900m), P6bn ($134m) of that will be for the tobacco farmers,” Lacierda said.
The Philippine star
