Tobacco industry wants only 2-centavo price hike in cigarette tax stamp

MANILA, Philippines — Tobacco industry players are seeking a “reasonable” 2-centavo (P0.02) increase in the price of new cigarette tax stamps after the state-run printer APO Production Unit Inc. sought a bigger hike that would double its profit.

In a statement Sunday, Philippine Tobacco Institute (PTI) said it hopes to settle with APO and the Bureau of Internal Revenue (BIR) their concern on the proposal to jack up the cost of tax stamps by 8 centavos (P0.08) per stamp — to 23 centavos (P0.23) from 15 centavos (P0.15) at present — when they meet on Monday.

Internal revenue stamps were being affixed on tax-paid cigarette packs to ensure the collection of correct excise levy, but unscrupulous traders had been able to churn out counterfeit stamps, resulting in foregone revenues for the government. The BIR will come out with new and improved stamps, which would still be printed by APO.

However, APO’s proposed price increase was opposed by PTI, which groups domestic cigarette manufacturers and exporters as well as tobacco leaf growers and suppliers.

PTI president Rodolfo Salanga claimed that “the cost of printing a tax stamp is only 11.37 centavos (P0.1137)” a piece such that the price hike would jack up APO’s net profit by 102 percent.

The current price of 15 centavos (P0.15) per stamp already gave APO a 30-percent margin, Salanga said.

PTI’s proposal to increase the tax stamp price by only 2 centavos (P0.02) to 17 centavos (P0.17) would be the same as the increase in 2018 from the original price of 13 centavos (P0.13) when the internal revenue stamps integrated system (Irsis) was started by the BIR in 2014.

PTI was worried that a significant increase in tax stamp prices would further burden the tobacco industry, which already shouldered higher excise taxes while fighting rampant illicit trade.

“The industry has consistently increased excise tax payments to the government from P33 billion in 2012 to P148.5 billion in 2020, a 350-percent increase that enabled the government to fund its developmental projects as well as the Universal Health Care (UHC) program,” Salanga said.

Also, “the industry has been battered with annual excise tax increases and production volume is down by half from 120 billion sticks in 2012 to 60 billion sticks last year, thus, hitting us with another blow to raise the cost of the tax stamps, would be too much,” Salanga added.

“We have immensely contributed to the government and imposing a steep price on the cost of the tax stamp is too much to bear and would only bleed the industry further,” according to Salanga.

/MUF