Re­fram­ing the sin tax de­bate


Manila Bulletin - - Views • Features - By FLORO MERCENE (To be con­tin­ued)

CIR­CU­LAT­ING with speed and fre­quency is the news and the accolades of the record ap­proval of the House bill seek­ing a re­turn to the two-tier tax sys­tem for cig­a­rettes in­stead of the uni­tary rate, which just com­menced this Jan­uary.

The full tran­si­tion to a sin­gle rate was the big­gest fea­ture of the Sin Tax Law passed in 2012, which was ap­proved by both houses of Congress.

In 2011, law­mak­ers and govern­ment reg­u­la­tors were bullish on the su­pe­ri­or­ity of the uni­tary rate as the panacea to smok­ing while earn­ing some se­ri­ous dough for the govern­ment.

Now, the Lower House seemed to have a change of heart as re­flected by their over­whelm­ing ap­proval of House Bill 4144, which keeps the two-tier rate while dish­ing the law-man­dated sin­gle rate for cig­a­rettes.

The bill pro­po­nents and its sup­port­ers ar­gue that a uni­tary rate will only fa­vor big to­bacco com­pa­nies and will un­der­mine lo­cal to­bacco play­ers af­fect­ing to­bacco farm­ers.

They ar­gued that it would be un­fair to tax low-priced cig­a­rettes with the same sin­gle tax on high-priced cig­a­rettes sold by big to­bacco com­pa­nies.

They are also afraid that with a sin­gle tax rate, multi­na­tional to­bacco firms would only sell pre­mium cig­a­rettes and stop sourc­ing lo­cal to­bacco leaves.

A two-tier tax sys­tem will pro­tect small to­bacco play­ers and, by ex­ten­sion, the lo­cal farm­ers since a dif­fer­ent and a lower tax rate would be slapped on them.

I’m all for leg­is­la­tion that would stop a vice and earn much needed rev­enues for govern­ment.

I also have no quar­rel with the meth­ods pro­posed by our leg­is­la­tors to curb smok­ing while pro­tect­ing our lo­cal farm­ers.

My con­cern only is that when we say that a two-tier tax sys­tem will safe­guard the well-be­ing of lo­cal to­bacco farm­ers, we might end up short­chang­ing them in the end.

For one, of­fi­cial govern­ment data do not sup­port this as data re­leased by the Na­tional To­bacco Ad­min­is­tra­tion would show that to­bacco leaves vol­umes and its rev­enue value dropped when the tran­si­tory 2-tier sys­tem for cig­a­rettes be­gan to take ef­fect.

Vol­umes or pro­duc­tion of lo­cal to­bacco leaves fell from 73.8 mil­lion kilo­grams in 2010 to 51.1 M kg in 2015.

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