PTI welcomes compromise on tax bill

The Philippine Tobacco Institute (PTI) welcomed the willingness of the Department of Finance and lawmakers to look for a compromise in efforts to restructure the excise tax system.

“It is encouraging that government showed an open mind and took into consideration the concerns raised by the different stakeholders,” PTI President Rudy Salanga said.

Smokes Tax

Tax on cigarettes

Chris Nelson, Philip Morris Philippines and Fortune Tobacco Corp. PMFTC president, also welcomed the latest development on the proposed restructuring of the excise tax system now being deliberated in Congress.

“We are open to collaborating with the government and Congress. What is important is that our legislators are open to hearing the side of stakeholders like the farmers, the workers, the consumers, and small manufacturers,” Nelson said.

The House ways and means committee passed the amended version of House Bill 5727, or the Restructuring of Excise Taxes on Tobacco and Alcohol last week.

Salanga, however, said that the figures under the revised measure are still very high and would have a deleterious effect on the livelihood of the 2.9 million Filipinos dependent on the tobacco industry. He called on Congress and the Finance department to review the figures even as he stressed that the PTI supports reforms in the excise tax and is for moderate and reasonable tax increases.

Under the amended version of House Bill 5727, the tax levied on the low-priced brands of cigarettes will go from P2.72 to P22 in the second year of implementation, or a 700-percent increase. Because low-priced brands account for 63 percent of tobacco sales, a 700-percent increase would hurt tobacco farmers, whose product are used primarily to manufacture low-priced cigarettes.

The amended version likewise provides that the low tier will increase by as much as 708 percent on the second year.

“The proposed increases remain high and would impact on the demand of legitimate cigarettes. We have always supported reforms in the excise tax system and we are for moderate and reasonable increases that would provide sustainable livelihood for the farmers and the workers,” Salanga said.

Nelson agreed.

“I feel that the proposed tax increases for tobacco are still high and can be further reduced to an equitable and reasonable level,” he said.

Meanwhile, ways and means panel chairman Isidro Ungab of Davao City on Sunday expressed belief that there is ample time to convince lawmakers to approve the amended tax reform bill in plenary.

“There is an urgent need to reform the excise taxes for cigarettes and alcohol,” Ungab said.

According to him, the measure has to be passed because the Philippines has to comply with the ruling of the World Trade Organization in January that the country must reduce taxes on imported distilled spirits.

“We have a compliance deadline to meet which is March next year,” Ungab said.

He added that the government has to update the excise taxes of alcohol and cigarettes to present prices and remove the annexes, which pegged the prices at 1996 levels. “We have to subject the excise taxes to indexation so as to adjust the same to inflation,” he said.

The lawmaker said that the amended tax reform bill would generate more revenues for the government.

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