Despite drop in removals, govt rakes in tobacco tax

DESPITE suffering a decline in its volume of removals, cigarette manufacturer Philip Morris Fortune Tobacco Co. Inc. (PMFTC) still paid the highest-cumulative tobacco excise tax to the Bureau of Internal Revenue (BIR) from January to July this year.

Based on finance officials’ analysis of the BIR data, the PMFTC paid a total of P42.04 billion, up by 6.9 percent from P39.3 billion in the same period last year.

However, Finance Assistant Secretary Maria Teresa S. Habitan said PMFTC’S volume of removals (removed tobacco products or cigarette papers or tubes, or any processed tobacco, from the factory) as of July slid by 3.8 percent year-on-year to 841 million packs from 874 million packs.

Of the P2.7-billion increase in the tax collections from PMFTC, Habitan said P4.2 billion was due to the increase in the tax rate, while there was a revenue loss of P1.5 billion from the decline in volume.

Trailing PMFTC in terms of tobacco excise tax payments is Japan Tobacco International (Philippines) Inc. (JTI), which notched the highest year-on-year excise tax payment increase of 73.1 percent to P38.8 billion from P22.4 billion in the same period a year ago.

Of the P16.4-billion increase in taxes collected from JTI, P3.9 billion was the result of the increase in the tax rate while P12.5 billion was because of the increase in volume, Habitan said.

JTI’S volume of removals jumped by 55.8 percent to reach 777 million packs as of July this year from only 498 million packs in the comparable period in 2020.

“This is equivalent to an increase of 278 million packs for the first seven months of the year,” Habitan said in her report during a recent executive committee meeting of the Department of Finance.

The PMFTC still cornered 50.7 percent of the market during the 7-month period, bigger than JTI’S share of 46.8 percent.

Based on the actual volume as of July this year, total cigarette excise tax collections by the BIR reached P82.97 billion pesos, a 31 percent-increase than last year’s P63.3 billion.

The remaining P2.13 billion of the total P82.97 billion in excise tax collections for the January-july this year was paid by other cigarette manufacturers, such as the Associated Anglo American Tobacco Corp. and Kenstand Philippines Inc.

The Businessmirror earlier reported that sin tax collection of the BIR and Bureau of Customs from January to July this year grew 25.5 percent to P173.1 billion from P138 billion the same period in 2020 as lockdown restrictions were eased.

Most of the excise taxes collected during the seven-month period came from tobacco products at P104.2 billion, reflecting a 34-percent spike from last year’s P77.7 billion.

It was only under the Duterte administration that excise taxes on cigarettes and other tobacco products were increased thrice to raise more funds for the Universal Health Care program and the government’s other priority initiatives. The first instance was under the Tax Reform for Acceleration and Inclusion law (Republic Act 10963) in 2018.

This was followed by RA 11346, or the Tobacco Tax Law of 2019, and RA 11467. The former hiked cigarette taxes to a uniform rate of P45 per pack starting last year while the latter imposed another round of tax hikes on e-cigarettes, along with alcohol products, also starting in 2020.