Solons: Two-tier tax on cigs fair, logical

House Bill (HB) No. 4144 is beneficial to all, according to legislators during the recent Committee of Ways and Means hearing on the bill at the Lower House.

“It’s a misconception that HB 4144 only favors one local manufacturer,” Quirino Rep. Dakila Cua said in the hearing. “Let’s not forget that foreign tobacco companies are players in the lower-tier market as well.”

Buhay Party-list Rep. Lito Atienza also supports HB 4144 noting that the proposed amendment has multiple benefits.

“If we consider the sin tax on cigarettes, we could consider the same for alcoholic beverages like San Miguel Beer and all other intoxicating beverages,” he said.

“Is it possible that the taxation for premium brands like Hennessy XO be the same with local brands like Tanduay or Ginebra San Miguel, to call it a form of unitary tax?” Atienza asked.

He noted that it would immediately kill local brands because the negligible price difference due to a unitary tax system oversimplifies the problem and develops a bias for products of the rich versus products of the less-moneyed sectors of society.

“It’s about time we take a more serious look at sin taxes so that while we promote the objectives of good health we at the same time raise revenue and discourage smoking. Let us not be unfair to our local industries particularly the farmers and manufacturers,” Atienza said..

A World Health Organization study on tobacco tax administration indicated that a tiered tax system, be it specific or ad valorem, might be an outcome of various political economic reasons, the most common one being to protect domestic products.

Atienza likened the situation to the plight of the Philippine cigar industry where the country used to be number one until a series of measures that ostensibly would have helped them otherwise killed the industry, now earning substantial revenues, but without Filipino brands being able to compete.

“The proposed amendment gives a second look at the economic situation of our farmers, and at the same time, without forfeiting the objective of discouraging smoking since higher taxes means less smokers. I therefore find logic, justice and fairness [to this measure] and we are definitely supporting it,” Atienza stressed.