Proposed floor price for cigarettes bucked

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A DEPARTMENT of Finance official said last week that a proposed legislation seeking to put in place a minimum price for cigarette products might may pose a challenge to the gains made through the Sin Tax Reform.

In an interview, Finance Undersecretary Jeremias N. Paul said he thought the introduction and passage of bills on setting a floor price on cigarettes was “not a good idea at this time.”

Paul said this “will ensure cigarette manufacturers’ profits in the future” and would be difficult to enforce.

Sen. Alan Peter S. Cayetano recently filed Senate Bill No. 2803 as counterpart to Romblon Rep. Eleandro Jesus F. Madrona’s House Bill No. 5013, seeking to set a floor price of P38 to P44 per cigarette pack.

The Finance official said that despite the inroads made to discourage smoking mainly by raising the excise taxes slapped on so-called sin products, it did not help that there remained cheaper cigarette variants being sold to smokers.

“The cigarette industry continues to introduce cheap cigarettes, priced as low as P2 per stick,” Paul noted.

Low-tier cigarette brands still enjoy higher sales over their more expensive counterparts.

The Finance official added that cigarette manufacturers seemed to be absorbing the tax increases, hence were not passing the full extent of higher tobacco taxes to consumers.

Paul said he looking into how cigarette firms could price some of their products very low despite the additional taxes.

He said the Sin Tax Reform Law passed in 2012 “notably raised tobacco taxes and fixed long-standing structural weaknesses related to the taxation of tobacco and alcohol products.”

In the first two years of its implementation, the sin tax reform generated $2.3 billion in additional government revenue.