British American Tobacco howls over sin tax provisions

British American Tobacco keeps on to promoting measures to raise sin taxes in the Philippines, but it also increased some issues on the Senate variant of the bill, which does not offer a level playing field to market players.

BAT Philippines

British American Tobacco Philippines

BAT Philippines Corporate and Regulatory Affairs chief Robert Eugenio highlighted they are not asking the Senate’s sin tax bill measure accepted on November 20.

The variant of the Senate offers P40 billion extra earnings in the first year of introduction once the bill has become a law.

Eugenio said although the accepted bill offers higher tax rates it still use the system comparable to the 1996 prices and the tax rates are depending on how much the companies paid this year.

“Those two provisions create a new list of brands that are in 2012 and then all new brands since they have to be determined by 1996 pricing levels,” he stated.

According to these provisions, Eugenio said there will still be no level playing field as new entrants will still be taxed higher rates even if their retail price is lower than the expensive brands.

The Bicameral committee has planned to examine the sin tax reform next week.

Under Senate Bill 3299 cigarettes packed by hand, which is taxed in 2012 of less than P7.56 will be required to pay P6 per pack since May 1, 2013.

For those, that are taxed in 2012 between P7.56 but less than P12, will be taxed P10 per pack, whilst those that are paying P12 or more will pay P14 per pack in 2013.

It is said in the bill that brands that will be at the market from March 1, 2013 to February 28, 2015 will be gathered “an excise tax relative to the net retail price (excluding the excise tax and the value-added tax) per pack…”

According to the House variant, tobacco products will be taxed depending on two sections – those that have net retail price of below P11.50 and those above P11.50.

BAT, which is the maker of Kent cigarettes, that at present are sold at 7/11 stores, re-established its Philippine procedures earlier this year and estimates to expand once the sin tax issues has been fixed.

Eugenio said that even if the Senate variant will be implemented as the new foundation for excise taxes BAT will continue to be in the country.

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