2-tier cigarette tax bid shelved

6 February 2017:

Review the Sin Tax Reform Law first before tackling the proposal to revert to a two-tier excise tax system for cigarettes.

This was the Senate leadership’s order to its ways and means committee, chaired by Sen. Sonny Angara, even as the Lower House already transmitted the railroaded bill seeking to reverse the shift to a unitary excise tax rate this year.

Last month, Senate President Aquilino “Koko” Pimentel III, Majority Leader Sen. Franklin Drilon, Minority Leader Sen. Ralph Recto and Sen. Risa Hontiveros signed Senate Resolution No. 279 directing the committees on ways and means as well as the health and demography, which Hontiveros chairs, to jointly review and assess the implementation of Republic Act No. 10351, or the Sin Tax Reform Law.

The resolution was filed to determine if RA 10351 achieved its dual purpose of not only raising additional revenues for the government but also slashing alcohol and tobacco consumption. Only after the review can the legislative branch ascertain if there will be any need to amend and further strengthen the Sin Tax Reform Law, according to the resolution.

The proposed amendment is in House Bill No. 4144, which the Lower House passed before Congress went on Christmas break. Pushed by homegrown Mighty Corp., it proposed that the two-tier system be maintained.

Separately, the Bangkok-based Southeast Asia Tobacco Control Alliance said in statement last week that Mighty consultant and former National Economic and Development Authority director general Romulo Neri “inappropriately cited Seatca’s report to buttress his support for a two-tier cigarette excise system as proposed in HB 4144, claiming in recent media reports that a unitary tax on cigarettes is anti-poor.”

“Tobacco taxation is globally recognized as one of the most effective measures to reduce tobacco use, protect public health and reduce health inequalities. In this regard, economic and public health experts agree that unitary specific taxes bring the most benefit to the health of individuals and societies. In contrast, ad valorem and multitier tax systems are prone to abuse by tobacco companies and make tobacco products more affordable to the youth and the poor.

While the two-tier tax system under HB 4144 may appear more equitable, in reality it will encourage the young and the poor to smoke lower-priced cigarettes, exposing them to the very real risks of addiction, diseases, disability and early death. In other words, a two-tier system is anti-poor,” said Sophapan Ratanachena, Seatca’s tobacco tax program manager.

“Seatca is shocked that a former national economic development chief would claim that tax systems should be designed to allow the poor to maximize their income spent on cigarettes, as if cigarettes are a necessity similar to food, water, clothing and shelter. By denying the clear link between tobacco and ill health and contradicting the fact that good health is a requisite for social development, Mr. Neri’s statements fly in the face of the Sustainable Development Goals (SDGs) adopted in 2016 by the United Nations to eradicate poverty and promote human well-being,” said Ulysses Dorotheo, Seatca’s Framework Convention on Tobacco Control program director.

Source: https://business.inquirer.net/224123/2-tier-cigarette-tax-bid-shelved#ixzz4XrzYsbwY