UNITARY TAX SEEN TO BENEFIT FOREIGN BRANDS

A unitary tax system on cigarettes will not equate to prohealth and will ultimately promote foreign brands, according to an industrialist.

“Health advocates may have a noble objective but they are overlooking a glaring issue,” said Engr. Ped Salvador, Ph.D., a prominent member of the National Economic Protectionism Association (Nepa).

“A unitary [tax] system will cause upshifting to premium brands and will only benefit foreign tobacco players,” Salvador said.

Nepa is a prestigious organization founded by Filipino industrialists in 1934 that focuses on the protection of Filipino industries.

When lawmakers passed House Bill No. 4144, health advocates mainly argued that keeping the two-tier system was antihealth since it would make consumers shift to cheaper cigarette brands instead of quitting altogether, he said in a press statement.

“However, the narrow price distinction between local and foreign brands will be negligible and therefore the average buyer will shift to foreign brands instead,” Salvador said.

He cited a study by the World Health Organization’s Collaborating Center for Tobacco and Economics at Beijing’s University of International Business and Economics (UIBE) which revealed that in China, drastic price increases in low-end cigarettes encouraged smokers to shift to middle and premium cigarettes.

“If the [upshifting] trend continues, it will kill off local manufacturers and be beneficial only to multinational companies,” he said.

UP Economics professor Dr. Ernesto Gonzales likewise supported the notion, saying Filipino-owned corporations like Mighty Corp. invest their money in the country and provide longterm employment to Filipinos.

“On the other hand, multinationals (companies) remit income to their mother entities, enjoy the tax privileges of foreign direct investment, invest their money overseas and worry about their stock health in the New York Stock Exchange,” Gonzales said.

Mighty is supporting the two-tier system of taxation, which expired this year under the Sin Tax Law. A bill seeking to retain the two-tier system has been approved at the House of Representatives.