WITH about a year left in his term at the Department of Finance, Secretary Margarito Teves is pushing for tax increases on cigarettes, liquors and beverages.

He, in fact, appeared before the House ways and means committee last week, which conducted public hearings on the tax measure.

The DOF recently asked the House of Representatives to raise the excise taxes on “sin products,” because—as Teves put it before the House ways and means committee—this cute administration of Gloriaetta needed to raise more revenue.

And so, Teves fielded the proposal to raise the excise taxes on those products.

Sure, boss, with one year to go, sure, the Arroyo administration could still cover its eight consecutive years of poor finances.

You know, the hundreds of billions of pesos in budget deficit!

Come on, to solve its money woes in one year, this administration would need a taxation scheme in the same degree of evil as the “Legacy” racket.

Who are they kidding, really, making it appear to the public that more taxes are actually for our own good?

Since when, boss?

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AS far as I know, the excise taxes on those products already went up by 11 percent at the start of the year.

The companies that were affected by the increase, actually, had no choice, because it was preprogrammed in the current excise tax law—Republic Act No. 9334.

Aside from the recent increase, the law requires another increase in 2011.

Thus the DOF, under Teves, in effect, wants to do away with the law.

You see, the law also provides for a four-tier tax structure on tobacco products, ranking the existing cigarette brands from “low” tax rates to “premium” tax rates.

The existing law automatically puts new cigarette brands at the “premium” level for excise taxes.

The DOF, under Teves, for whatever reason, wants to change all that. Ah basta!

Perhaps not surprisingly, the DOF also wants to remove the tax tiers. The DOF is asking the House for a single rate on all kinds of cigarettes.

Hmmm. Let me see, I think such a measure will be good for foreign cigarette companies that are trying to penetrate the Philippine market.

You know, companies like British American Tobacco, or BAT.

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AUTHORS of various bills mirroring the DOF proposal, led by Quezon Rep. Danilo Suarez, appear to be giving up on their bills.

For one, the House may be pressed for time. The DOF bill is a controversial tax measure. And we all know that the elections are just around the corner.

No wonder, Teves had to make a personal last-ditch appeal to the House ways and means committee.

But the congressmen from tobacco-producing provinces (Ilocos region, for instance) were not about to give in to his advances.

Deputy Speaker Eric Singson, who comes from the north, for instance, was rather vocal in criticizing the DOF measure as “antitobacco farmers.”

Tobacco farmers’ groups, in fact, attended the hearings in full force, registering their objection to the House committee.

What I am saying is, well, this superb idea of the DOF on new taxes is not going to be a walk in the park for this cute administration.

There is a political price to pay.

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AND so it puzzled some congressmen why Teves insisted on getting the House to approve the tax increases.

It even inspired Rep. Roilo Golez, a member of the House ways and means committee, to accuse Teves of “insensitivity” to the needs of some two million people who were dependent on the tobacco industry.

For one, the congressmen did not believe that the tax increase would really mean higher revenue for the government.

Worse yet, it would backfire and kill the tobacco industry.

You see, based on figures submitted by the DOF to the committee, the excise tax collection in the first quarter of 2009 fell by almost 36 percent.

In absolute figures, it meant a drop of more than P2 billion.

I don’t know, but P2 billion can already build more than 200 classrooms.

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AS I said, the excise tax rate increased by 11 percent at the start of 2009. Could it be the reason then for the drop in collection?

Teves insisted before the committee that tobacco products, as “sin” products, were not “price sensitive.”

What he meant was, even if this cute administration shoots up the excise tax rates to another planet, the public would continue to smoke.

But the DOF figures presented to the committee showed otherwise. They showed a “price elasticity factor” of .235 for cigarettes.

What it meant was, for every 10 percent increase in the price of cigarettes, demand is expected to go down by 2.35 percent.

In other words, people would buy less local tax-paid cigarettes. They would rather buy smuggled cigarettes. Or something like that!