Congressional oversight committee urged to review ‘sin’ tax law

Review the sin tax reform law first before entertaining moves to amend it, the Philippine unit of global tobacco giant British American Tobacco (BAT) suggested Monday following powerful lobbying in Congress to defer the implementation of a unitary cigarette excise tax rate next year.

“BAT supports the Department of Finance’s call for the congressional oversight committee to do a full review of Republic Act (RA) No. 10351 or the Sin Tax Law of 2012 before the law is amended,” the company said in a statement.

Sen. Juan Edgardo “Sonny” Angara, who chairs the congressional oversight committee on comprehensive tax reform, earlier said the scheduled review of RA 10351 was already ongoing.

Last week, Finance Secretary Carlos G. Dominguez III also urged Congress to allow the sin tax reform law to be fully implemented until it matures next year.

Under RA 10351, tobacco products will be slapped a unitary rate of P30 a pack starting Jan. 1, 2017, following a two-tier system this year wherein cigarettes priced P11.50 a pack were being taxed P25 while those priced higher were slapped P29 a pack.

“We were the sole tobacco company to support the Sin Tax Law of 2012, which not only leveled the playing field yet allowed the Philippine government to pursue its revenue and public health goals. At the time of deliberations, we were consistently supportive of either a single-tier or two-tier system. Both have a successful pedigree around the world. Our position has not shifted. If the Philippine government judges a two-tier system is appropriate to extend we have no issue with this,” BAT Philippines general manager James Michael Lafferty said.

“However, we should invest the time as was done on the original sin tax bill to fully vet any amendments. The newly proposed bill has two main flaws, the level of net retail price and no mechanism for the net retail price to increase in the future. Therefore, we should avoid rushing a new law into effect without a full study of both intended and unintended consequences,” Lafferty added, referring to House Bill (HB) No. 4144, which critics said was railroaded in the lower house such that it was expected to be passed on third and final reading before Congress goes on break this week.
HB 4144 was proposing that the two-tier system be maintained by slapping an excise tax rate of P32 a pack on cigarettes priced P11.50 and below, as well as P36 for those priced higher. It also proposed an annual 5-percent increase in the excise tax beginning 2018.

Industry sources are expecting the bill authored by ABS Partylist Rep. Eugene Michael B. de Vera and reportedly pushed by homegrown low-priced cigarette manufacturer Mighty Corp. to be approved at the lower house plenary by Wednesday, and then transmitted to the Senate during the break.

HB 4144 was filed only on Oct. 19 and had undergone only two hearings at the committee level, the first one last Nov. 28. BEN O. DE VERA