The Finance Department on Monday expressed strong opposition to the decision of a House committee level to keep the two-tiered excise tax structure for machine-packed cigarettes in the country.
Finance submitted its position in a paper to the Ways and Means Committee of the House of Representatives, objecting to House Bill 4144 filed by ABS Partylist Rep. Eugene De Vera on November 18.
Despite the strong opposition from Finance, several stakeholders and tobacco farmers, the House committee approved the bill during its second reading.
The bill seeks to discard the unitary tax imposing a P30 excise tax on all brands slated for January 2017 as provided under RA 10351.
“Tax differentiation is not germane to the principle behind the excise taxation of cigarettes. More than a revenue measure, the Sin Tax Reform Law or RA 10351 is a health measure with a primary goal of curbing tobacco use in particular among the young and the poor because of its known detrimental effects to health,” Finance said.
“Prices and equity reason therefore should not figure in the tax structure. Thus, one of the key features of the law is the gradual shift to unitary taxation. A unitary rate by 2017 will further the gains of the law when it comes to its revenue and health objectives,” Finance added.
The committee received 26 votes, including that of Albay Rep. Joey Salceda who voted with reservations for “radical” amendments in the bill and an abstention from Siquijor Rep. Ramon Rocamora.
“There is a closer correlation between exports sales and tobacco production. This affects local sales and therefore they will benefit if they do this, it is the lower export market that is hurting the farmers not higher local taxes,” Salceda said during the deliberations.