3 tobacco firms support bill setting minimum cigarette prices

Three tobacco manufacturers have pledged all-out support for the move to set a minimum cigarette price in the country to curb the youth from smoking and even stamp out tax evasion.

Japan Tobacco International Philippines (JTI) and Bulgarian-firm Bulgartabac Philippines gave full support to House Bill 5013, while Bulacan-based Mighty Corp. wanted a more thorough study of the measure, but “fully subscribed to the noble intention of the subject bill.”

JTI, Bulgartabac and Mighty submitted their respective position papers on the proposed imposition of minimum cigarette price per pack to the House Committee on Trade and Industry Chairman and Las Piñas Rep. Mark A. Villar.

Based on JTI’s position paper, the bill will address the rise in the sale of illicit and non-tax paid cigarettes ultimately improving the fiscal position of the government.

JTI also said that the proposed cigarette floor price will aid the Bureau of Internal Revenue’s (BIR) newly-adopted tax stamp system, which was enforced to guard against any illegal activities.

“We see the proposed minimum cigarette price as a useful additional tool to enforce against any illegal activities, all the more since it applies to tobacco retailers, importers, as well as manufacturers,” Manos Koukourakis, JTI general manager said.

Under the proposed bill, the government will impose a minimum price of 38 per cigarette pack beginning this year, 44 by 2016 and 51 by 2017. Starting 2018, the floor price for cigarette products would be adjusted every year by four percent.

Meanwhile, Roger Edmeston Lamb, Bulgartabac president, said that they are amenable to the minimum prices indicated in the bill, and hoping that the same shall remain.

“However, our view will vary if the prices indicated therein are much higher as this would greatly affect the tobacco manufacturers and importers in the country,” Lamb said.

“It is our position that placing a higher minimum cigarette price would further encourage illicit trade which the tobacco industry is aiming to prevent,” he added.

On the other hand, Oscar P. Barrientos, Mighty executive vice president, said that they support the intention of the bill of ensuring that no minors will have access to very cheap cigarettes.

But Barrientos said Mighty needed “more time for our legal and marketing staff to have a thorough study of the subject bill. We need an exhaustive analysis as to the subject bill’s constitutional, economic, marketing, trade, taxation, labor and other aspect.”

However, local market leader Philip Morris Fortune Tobacco Corp. (PMFTC) rejected the proposed measure on minimum cigarette price, saying the enforcement of such a law would “pose a much greater challenge.”

Raul C. Academia, PMFTC Trade and Regulatory Affairs director, said the issue on tax compliance has already been taken up by the BIR with the implementation of tax stamp effectively aiding the government in monitoring proper excise tax compliance.

“At this point in time, we respectfully suggest that it may be more prudent to properly evaluate the effects of the tax stamps before further legislative measures are adopted,” Academia said.

“This would not only reaffirm the commitment of the government to its chosen tax measure but would also inspire confidence in the stability of the tax and regulatory framework,” he added.