Tobacco firm to push through with expansion plan in PH

BRITISH American Tobacco is aggressively pursuing its expansion in the Philippines with hopes that the new excise tax system would level the playing field and bolster its investment plan.

Robert Eugenio, public affairs head of BAT Philippines, said this in a briefing in Kuala Lumpur, Malaysia.

“We are hopeful that the Aquino administration, which fully supports reforms of sin taxes under House Bill (HB) 5727, would provide the necessary push for reforms in the tobacco industry,” Eugenio said.

Authored by the House Committee on Appropriations chair Joseph Emilio Abaya, HB 5727 seeks to restructure the existing four-tiered excise tax system into a single tier system that will impose a P30 tax per pack on all tobacco products within three years of implementation.

At present, cigarette brands in the Philippine market before 1996 are taxed based on their 1996 price per pack. Newer brands are taxed based on current prices. Further increases would be based on inflation rates.

“The excise system is a barrier to entry of new players.  New brands, whether locally produced or imported, are taxed higher than old brands,” Eugenio added.

BAT Philippines’ hopes are also pinned on Republic Act 9334, which is expiring in 2013. Under this law, an increase in excise tax rates on sin products are pegged at 8 percent every two years beginning 2007. The last tax adjustment was made in 2009. Another 8 percent increase automatically took effect last year.

“There are several means to level the playing field and we are supportive of those options. All we want is a chance to fairly compete,” he added.

A London-based publicly-listed company which serves 180 countries worldwide, BAT is preparing plans to invest $200 million in the Philippines in the next five years to develop, produce, distribute and market its brands such as Lucky Strike, Pall Mall, and Dunhill.