Philippine Tobacco Institute to Reform the Excise Duty for Cigarettes

June 21st, 2012 00:00

The Philippine Tobacco Institute (PTI) admitted the readiness of the Department of Finance and lawmakers to find a concord in attempts to reorganize the excise tax system.

“It is pleasant that government showed its cooperative attitude and took into account the worries raised by some stakeholders,” PTI President Rudy Salanga stated at the press conference.

Chris Nelson, Philip Morris president welcomed the current development on the advised restructuring of the excise duties system now being considered in Congress.

“We are ready co collaborate with the government and Congress. What is mostly essential is that our government officials are ready to listen to the side of stakeholders, as the tobacco growers, the workers, the smokers and large and small scale manufacturers,” Nelson stated.

Salanga, however added that the data under the revised actions are still too high and would have a harmful effect on the livelihood of the 2.9 million Filipinos that depend on smoking products. He asked Congress and the Finance to examine again the figures even as he underlined that the PMI backs reforms in the excise duties and is for reasonable tax growth.

According to the amended version of House Bill 5727, the tax charged on the cheap cigarette brands will go from P2.72 to P22 in the second consecutive year of implementation, or a 700% raise. As cheap cigarette brands account for 65% of tobacco sales, a 700% increase would affect tobacco growers, whose premium products are used mostly to produce low-cost cigarettes.

Philippine Tobacco

“The advised increase remains rather high and would affect the demand of legal cigarettes. We have always stood in favor of reforms on the excise tax system and we require adequate increases that would assure a sustainable livelihood both for tobacco growers and the workers,” Salanga said.

“I believe that the advised tax increases for tobacco are still too lifted and can be decreased to a more reasonable level,” Nelson said, agreeing with Salanga.

“There is a great need to reform the excise duty for cigarettes and beverages,” said chairman Isidro Ungab of Davao City.

According to Mr. Ungab, the action has to be implemented because the Philippines has to comply with the ruling of the World Trade Organization (WHO) passed in Lanuary, which states that the country should decrease taxes on imported distilled beverages.

“We have a commitment that should be met till March next year,” Ungab said.

He also added that the government officials have to drive the excise taxes of beverages and cigarettes to current prices and remove the annexes, which increased the prices at 1996 levels.

The lawmaker also said that the changed tax reform bill would produce more profits for the government.

Latest News