Unitary tax on cigarettes to take effect Jan. 1, 2017
The shift to a unitary excise rate for cigarettes will be implemented in 2017 as mandated under the Sin Tax Reform Law as the Senate needs time to study the measure passed by the Lower House aimed at retaining the two-tier system.
In an interview last Friday, Sen. Juan Edgardo “Sonny” Angara confirmed that the Senate ways and means committee, which he chairs, already received the transmitted copy of House Bill No. 4144 passed by the House on Representatives on third and final reading last Dec. 13. “They passed it on third reading so it went straight to us in the Senate, that’s normal,” he said.
HB 4144 authored by ABS Partylist Rep. Eugene Michael B. de Vera 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 and P36 for those priced higher. It also proposed an annual 5-percent increase in the excise tax beginning 2018.
However, under Republic Act No. 10351 or the Sin Tax Reform Law, 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.
Since it was already green-lighted by the Lower House, HB 4144 no longer needs a counterpart bill in the Upper House, Angara said. “We can hear it early next year.”
Angara said he has yet to see HB 4144 as he declined to comment when asked if he would support the bill. “We’ll study it. We’ll have a public hearing.”
The senator also pointed out that with the implementation of RA 10351 in full swing pending passage into law of an amendment through HB 4144, the excise tax to be slapped for tobacco products would automatically shift to a single rate on Jan. 1, 2017. “It’s OK even if HB 4144 is not yet passed because there’s a built-in increase already so revenues are taken cared of,” he noted.
Angara said that in case HB 4144 was enacted into law, it could supersede RA 10351 and revert to a two-tier cigarette excise tax structure.
Last Friday, local and foreign business chambers said they were backing the Department of Finance’s push for the full implementation of the Sin Tax Reform Law passed in 2012.
“We believe that RA 10351 was carefully and properly designed to meet the desired national targets and has undergone proper consultations and thorough deliberations with key stakeholders. It is a good and sufficient law that would lead the government to attain its health and revenue goals,” the business groups said.
The Philippine unit of multinational tobacco firm British American Tobacco as well as PMFTC Inc., tycoon Lucio Tan’s joint venture with global cigarette giant Philip Morris, had also expressed support for the DOF position.
Industry and government sources earlier claimed that HB 4144, which was being backed by homegrown low-priced cigarette manufacturer Mighty Corp., was railroaded in the Lower House. HB 4144 was filed only on Oct. 19 and had undergone only two hearings at the committee level, the first one last Nov. 28.
After it was approved by the House ways and means committee without amendment on Dec. 5, HB 4144 was already tackled in the plenary the next day as the bill was also adopted as the committee report submitted to the committee on rules.
Health groups had also lambasted House members belonging to the so-called “Northern Luzon Alliance” for railroading the bill to purportedly protect the tobacco industry’s interest.
