Tobacco Tax Bad for Tobacco Farmers

Progressive lawmakers have put their foot down against six taxes on tobacco. Lawmakers from Anakpawis and Bayan Muna said the sin tax bill Congress approved on third reading last June 6, 2012 will not benefit local tobacco producers. “In the name of providing more funds for the universal health coverage program, the Department of Finance wants to pass a regressive tax measure that will further burden local tobacco farmers and consumers alike,” the lawmakers said. House Bill 5727 intends to put up a two-tier excise tax system for tobacco. In the proposed system, cigarette packs with a net retail price of P11.50 ($0.27) or less will have an excise tax of P12.00 ($0.28) for the first year, and P 22.00 ($0.52) for the second year. These are equivalent to an increase of 341 percent and 709 percent respectively. On the other hand, cigarette packs that sell more than P11.50 ($0.27) at retail will have an excise tax of P28.30 ($0.67) for the first year, and P30.00 ($0.71) for the second year. These are equal to an increase of 940 percent and 1,003 percent respectively. Proponents of the sin tax bill in the Department of Finance said that if passed, the measure will lead to the generation of incremental revenue amounting to P31 billion ($738 million). Aquino said he recently signed the bill’s certification as urgent. Earlier in May, President Aquino himself said the sin tax bill is a priority measure of his administration. He said the revenues it will generate will benefit all tobacco-growing areas, and go toward funding health-related and income-generation activities for tobacco farmers. According to the president – a known smoker – the current tax system discourages new players from joining the tobacco industry. With the passage of a new tobacco tax law, he pointed out that new players can enter the fray and provide healthy competition, raising the price of tobacco sold by farmers. Anakpawis Rep. Rafael Mariano, however, said the Aquino government’s main concern with the sin tax is to raise more revenues and not about health-related issues brought about by cigarette and alcohol consumption.