Biz buzz: Incongruent data
The aftereffects of the speedy approval of House Bill 4144—which seeks to retain the two-tiered tax scheme for tobacco products—continue to be felt in and out of Congress, but lawmakers who backed the plan may be in for a surprise if empirical data is to be examined closely.
Many backers are treating the bill as the miracle pill that will protect small tobacco farmers and local tobacco players, but existing government data seems to show otherwise.
Based on data released by the National Tobacco Administration (NTA), production of and revenues from local tobacco leaves have declined during the four years that the two-tier rate on cigarettes was in place.
Of course, backers of the bill argue that keeping the two-tier tax rate on cigarettes would safeguard the interest of local tobacco farmers as compared to a unitary rate, which took effect this month.
From 2013, the first year of the two-tier tax regime, volume of production of tobacco leaves dropped from 67.7 million kilograms (M kgs) to 51.2 M kgs in 2015.
Official figures from NTA— which is the only state agency supporting the bill—even showed that the volume of production was much higher during the multitier regime, reaching as high as 73.8 M kgs in 2010.
There was a big drop in the production of the local Virginia tobacco, from 42.446 M kgs in 2010 (multitier rates) to only 27.209 M kgs in 2015.
Production of local Burley also decreased to 16.5 M kgs in 2015 from a bumper harvest of 19.8 M kgs back in 2010 when the excise tax was four tiers.
Consequently, the revenue value of the leaf production also plummeted from a high of P4.847 billion in 2010 to P3.591 billion in 2015.
From the time the two-tier tax system took effect in 2013, the value of tobacco production already plunged from P4.7 billion in the same year to P3.5 billion in 2015.
Clearly, the NTA data suggest that local tobacco farmers started to lose production volume and income opportunity when the two-tier rates were in place.
The only thing that’s clear is that the government scored a crucial win in curbing tobacco consumption if the drop in local production and revenues would be the gauge.
If the champions of the bill say that a return to two-tier rate would be beneficial to local tobacco farmers, how could this be when production and leaf revenues continued to drop under such tax regime?
It might make sense to allow the recently enforced unitary rate to be fully implemented to see if this superior than the proposed 2-tier rates.
And maybe—if there was no legislative rush—proponents and supporters of the 2-tier tax regime could have weighed the data (which is available on the NTA website) before promising the moon and the stars to local tobacco farmers. —DAXIM L. LUCAS
Wunder goes to Cebu
News surrounding ride sharing in the Philippines hasn’t been the most positive as of late—except for Wunder, that is.
The “carpooling community” company, backed by investors in Europe and Silicon Valley, has positioned itself very differently from behemoths like Uber and Grab, since Wunder’s drivers make no profit.
Falling outside the scrutiny of the government has allowed its operations flourish.
The company was launched in Metro Manila in February 2016 and it is set to launch in Cebu next week.
The numbers it shared are impressive. It now has a community of 200,000 riders and drivers, with more than one million rides given.
This mode’s success goes back to Wunder’s core model, which is carpooling.
Wunder drivers make no extra money. They simply offer empty seats to travelers going a similar route. Riders just pay a small share, which reflects part of the cost to get from point A to point B. Both driver and rider save money.
Wunder said the average driver in Metro Manila shared 14 rides per month, and saved between P3,000 and P5,000 per month.
Those who share more often, naturally, can save more.
“We need to fill empty seats. Last year, 200,000 people came together, and without adding a single car to the road,” said Sam Baker, Wunder chief operating officer. —MIGUEL R. CAMUS
