DA says 2-tier tax will bring hardship to tobacco industry

AGRICULTURE Secretary Emmanuel F. Piñol said legislation to impose a twotiered tax system on cigarettes will bring hardship to tobacco farmers who are still reeling from the previous tax hike.

“The DA (Department of Agriculture) supports the position of a unified tax scheme,” Mr. Piñol said in a text message over the weekend, adding that he will direct the National Tobacco Administration (NTA), one of its attached agencies, to explain its position.

Mr. Piñol was reacting to reports that the NTA had expressed support for House Bill 4144, which seeks to impose a higher sin tax on cigarettes and amend provisions of the Republic Act of 10351 or the Sin Tax Reform Law of 2012.

Last week, a group of tobacco farmers called on the Senate to consider the effects of the said bill.

“Our position is that we hope the old law is maintained without adding the new tax from 4144. We want the old law to mature before they make another one. They already are taxing cigarettes a lot,” said Philippine Tobacco Growers Association (PTGA), Inc. President Saturnino C. Distor in a phone interview last week.

“We are affected because every time cigarette prices rise, demand falls,” Mr. Distor added.

In a petition published in a newspaper last week, the PTGA, with the Federation of Free Farmers (FFF) said that revenue the government derived from tobacco hit P100 billion in 2015, from P32 billion recorded in 2012.

This, according to the farmer groups, has the tobacco sector “giving more than our fair share” as it accounts for around two-thirds of total sin tax collections.

Data from the NTA, as cited by the groups, also showed that local tobacco production dropped to 51.95 million kilograms in 2015, down 19.81% from 2012 levels.

Mr. Distor also said Congress is trying to pass House Bill 4144 without due consultation with farmers.

“We were never consulted. I only found out about the bill on second reading,” Mr. Distor added.

Under HB 4144, packs of cigarettes will be taxed P32 or P36 depending on price, with a 5% increase in tax every year.

Meanwhile, the current Sin Tax Reform Law of 2012, which took effect in 2013, provides that packs of cigarettes, regardless of net retail price, will be taxed at a single rate of P30.00 with an annual 4% upward adjustment thereafter.

ABS party-list representative Eugene Michael B. De Vera who filed the measure said that lawmakers had to “strike a balance” between the need to discourage cigarette smoking, raise government revenue, and look after the welfare of the tobacco industry.

Mr. De Vera also noted that under Republic Act 7171 and Republic Act. 8240, tobacco planters have a 15% share out of the collection of the tobacco excise taxes.

“So any increase in tobacco excise taxes benefits the tobacco planters,” Mr. De Vera said in a text message last week. —