Europe-PH News

Cigarette Maker To Smoke Out House Speaker On Sin-tax Reform Bill

May 24, 2012

Fernan Marasigan

Europe-PH News

A cigarette manufacturer said on Wednesday it is hoping Speaker Feliciano Belmonte Jr. would make good his promise that the administration-dominated House of Representatives would consider amendments to the controversial Malacañang-backed sin-tax reform bill, which was hastily approved in the committee level amid mounting opposition from several legislators and stakeholders.

JT International (Philippines) Inc. (JTIP), manufacturer of Winston cigarettes, added that it is optimistic about pronouncements of Belmonte that changes could be introduced to House Bill (HB) 5727 during plenary debates.

Last week the House’s Ways and Means Committee approved the bill that moved the current tax structure on cigarettes from four tax tiers to two tax tiers.

JTIP is calling on Congress and the Department of Finance to revisit the structure as well as the provisions of HB 5727 that include steep increases of between 250 percent and 808 percent.

“While the bill still needs some adjustments to ensure a moderate and predictable as well as equitable tax structure for the tobacco industry without a total denormalization, JTIP is glad to learn that Congress is willing to listen to the many concerns raised by the various stakeholders,” JTIP General Manager Manos Koukourakis said.

He added that moderate and reasonable tax increases for all cigarettes will also avoid unintended consequences.

According to Koukourakis, under the current tax system, Winston is taxed at P7.56 per pack. But under the amended HB 5727, Winston would be lumped with high-priced and premium brands and slapped with a 374-percent tax increase at P28.30 per pack in the first year of the bill’s implementation. On the second year, the tax increase would spike to 396 percent at P30 per pack. This means smokers would likely have to pay double for their cigarette brand.

“We hope that Congress would consider the negative impact of structural changes and excessive tax. We are not averse to the implementation of tax increases, but these should involve equitable tax structures and moderate and predictable excise increases to ensure that legitimate brands remain competitive and that they are not edged out by cheap, smuggled and counterfeit cigarettes,” Koukourakis said.

He added that the Philippines would suffer the same dire consequences that other economies have suffered after imposing excessive taxes on tobacco products.

These economies include those of Malaysia, Hong Kong and Singapore, which continue to struggle with unabated tobacco smuggling as a result of steep tax increases they have imposed on legitimate cigarette brands.

While several legislators and local cigarette and alcohol manufacturers want further revisions of HB 5727, the European Chamber of Commerce of the Philippines (ECCP) wants the measure to be restored to its original form.

Henry Schumacher, ECCP’s vice president for external affairs, expressed disappointment with what he described as unexpected and surprising amendments to the measure prior to its approval by the Ways and Means Committee.

“The ECCP is extremely disappointed with the amendments to the excise tax reform bill HB 5727 on distilled spirits and we urgently request the bill be revised to its original proposal, Schumacher said in a statement.

But according to a local cigarette manufacturer, approval of the sin-tax reform bill in toto as what Malacañang wants, will result in major dislocation because many workers will lose their jobs and farmers will have no buyers of their crop.

 

Source: Business Mirror; Second Frontpage; 24 May 2012

 

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