Tobacco Companies Remains Profitable
Tobacco industries have no reason to complain about the sin tax ordinance because the in company will still be beneficial, according to a Palace official. Presidential Spokesman Edwin Lacierda brushed aside the appeal of the tobacco industries to defer the bill that would increase sin taxes on sin smoking products supposedly by 1,000 per cent. The plead of the tobacco firms, which instead sought for a “dispute that works for all of us,” was published in paid ads in several newspapers.
“The appearance of that advertise would involve that upon the passing of the sin tax law into legislation, the increase will immediately be 1,000 per cent. That is incorrect,” Lacierda reported in a Palace press briefing.
From the current tax rate of P2.72, Lacierda explained that the proposed legislation seeks to increase the tax on low priced cigs to P12 by 2013, P22 by 2014, P28 by 2015 and P32 by 2016. “That’s hardly 1,000 percent raise,” Lacierda explained.
Asked if the tobacco companies should no longer complain, Lacierda argued: “Tobacco companies remain profitable wherever they are.”
Despite the imposition of the sin tax measure, Lacierda also pointed out that the Philippines will still be one of the countries in Asia with the lowest cigarette prices.
Compared to the low priced cigarette package in the Philippines worth P26, he said a low-priced cigarette packaging in Vietnam costs P26 while Indonesia will be around P48.50 and Thailand, P72.
In explaining the government’s support for the sin tax regulation, Lacierda also said the Philippines is also a signature of the World Health Organization (WHO) treaty on smoking control.
A 70 per cent increase in high taxes on tobacco products has been recommended by the WHO.
“If we are to pass the sin tax law, the tax burden on the retail price will only amount to 60 per cent so it is even less that what is proposed by the WHO convention on tobacco control,” he .
He also ensured that the sin tax bill has enough safeguards to protect the tobacco growers once the higher sin taxes are enforced. Of the P40-billion sin tax proceeds, Laciera said P6 billion will be set aside for the ordinances protecting the welfare of tobacco farmers.
In the newspaper ad, PhilTobacco Growers Association, Federation of Free Farmers, Philippine Aromatic Tobacco Development Association, Philippine Tobacco Institute, Ang Masa Bansa, Uptop Consumer, Trans-Manila Inc. and Universal Leaf Philippines Inc. have appealed to President Aquino to stop the “1,000 percent” tax hike on their tobacco products and instead achieve a compromise “that works for all of us.”
The group required that if the sin tax law is passed, the price of a cigarette package will shoot up to P50 from P15. smokers will be not able to buy the tobacco products “with devastating consequences for traders.”
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