Higher excise taxes imperil tobacco sector

A proposal that seeks to raise excise taxes on tobacco may lead to the extinction of the local cigarette and tobacco farming industries, according to lawmakers from the tobacco-growing provinces in Luzon.

In a letter to the Senate, the North Luzon Alliance expressed grave concern over the continued call of anti-tobacco groups to jack up the tobacco excise tax by more than 100 percent.

“Such a move will certainly affect our constituenttobacco farmers who are still struggling from the loss of income as a consequence of RA 10351 or the Excise Tax Reform Law of 2012 and the Train Reform for Acceleration and Inclusion Act.

“It is our shared responsibility as members of the NLA to protect the interests of our constituents who depend on the tobacco industry. This industry has been providing livelihood for them and their families and this will continue for many years to come,” the lawmakers said.

The successive tax increases since 2013 have taken their toll on the industry, they said.

Data from the Bureau of Internal Revenue show that the resulting increase in the prices of cigarettes led to a 47 percent decline in the volume of cigarette production or from 127 billion sticks in 2012 to just 73 billion last year.

This decrease in volume has led to a drastic decline in tobacco leaf production as well as reduction in tobacco farmers and farmed areas.

According to data from the National Tobacco Administration, there was a 26 percent decline in leaf production from 65 million kilos in 2012 to 48 million kilos last year. The number of farmers also decreased from 52,610 to 34,465 a year ago.

There was also a decline in the area of land planted with tobacco from 36,160 hectares to 22,704 hectares a year earlier or more than 13,000 hectares abandoned.

NTA estimates that there are over 2.7 million Filipinos employed or are dependent on tobacco.

“Thus, groups that are lobbying to increase tobacco tax again fail to recognize that millions of Filipinos are faced with the threat of losing their primary source of livelihood each time they lobby for higher taxes,” lawmakers said.

From 2013 to 2017, the tobacco industry has consistently provided a big source of revenues for the government. It has contributed more than P475 billion in excise taxes since the passage of the Excise Tax Reform Law in 2012.

“On behalf of more than nine million people living in Northern Luzon, we request your good office to seriously consider the plight of our farmers and constituents in the tobacco industry. Our fellow Filipinos in Northern Luzon should not be marginalized through successive and unreasonable tax increases,” the lawmakers said.

The Senate is under pressure to increase tobacco taxes to generate more revenues for the government’s health care program.

Health groups are pushing for an increase in tobacco excise tax to P90 from P35 per cigarette pack.