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Philip Morris asks government to study tax hike

Philip Morris Fortune Tobacco Corp., the biggest tobacco manufacturing company in the country, asked the government to carefully study the impact of the Tax Reform for Acceleration and Inclusion law before imposing further increases in excise taxes on tobacco products.

PMFTC, a joint venture of Philip Morris Philippines Manufacturing Inc. and Fortune Tobacco Corp. that controls over 90 percent of the domestic cigarette market, said its position on the issue submitted to Congress was unchanged.

“We believe any further increases in excise taxes on tobacco at this time is unwarranted,” it said in a statement Tuesday.

“There is still a need to review the impact of the last increase under Train 1 in terms of tax collection, revenue utilization, on the livelihood of farmers, jobs in the manufacturing sector and the rise of counterfeit cigarettes,” PMFTC said.

Finance Secretary Carlos Dominguez III said his agency would “try its best” to convince Congress to impose new sin tax rates on tobacco products because pricey cigarettes would discourage smoking especially among the youth.

Dominguez said increasing the current tobacco excise tax rates to levels that would effectively curb smoking would help supplement funds for the Universal Health Care program, especially for the treatment of smoking-related diseases. 

“There’s still the Senate. We will try our best. This thing doesn’t end until the president signs it. We’re there, we’re keeping at it. We hope that they will come up to what is good for the country,” Dominguez said during a press briefing. 

Dominguez’s statement was in reaction to the recent approval by the House of Representatives on third and final reading of House Bill 8677, which provides for an increase in tobacco excise tax rates to levels that did not go far enough to what the Department of Health and anti-tobacco and health advocates recommended. 

The House-approved bill aims to raise the current tax of P35 per pack of cigarettes to P37.50 beginning July 2019. The bill also calls for another increase to P40 in July 2020, P42.50 in July 2021, and P45 in July 2022. Thereafter, the rate would be raised 4 percent every July annually.

The DoF proposal supports the position of Rep. Angelina Tan to raise the tobacco excise tax to P60 per pack in 2019 and increase it by 9 percent annually thereafter. 

“The society has to agree what is more important: enough money for healthcare or favoring companies that produce products that damage health? That’s what society has to agree on, and that’s what the representatives in the legislature ARE supposed to reflect,” Dominguez said. 

Citing the testimonies of resource persons heard by the House ways and means committee during its deliberations on the proposed new tobacco tax rates, Dominguez said the higher excise taxes on cigarettes under the Sin Tax Reform Law led to a drop in the number of smokers by roughly a million people per year.

He said fewer teenagers were now getting into the habit of smoking.  

“Our revenues have to keep on going up because we are supporting a lot of people who are getting sick from smoking. That was all the testimony. I was reading the summary of the testimonies, it’s overwhelmingly in favor of higher taxes for health reasons,” Dominguez said. 

Topics: Philip Morris Fortune Tobacco Corp. , ax Reform for Acceleration and Inclusion law , Fortune Tobacco Corp.
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