Senate sin tax acceptable, says BAT

British American Tobacco’s Philippine unit expressed its preference for a Department of Finance-backed version of reforms on the so-called sin taxes, although the company also found the version presented to the Senate plenary as acceptable.

In a statement, BAT Philippines said it has consistently pushed for a revamped system on excise taxes on tobacco products based on two fronts: changes should dismantle what it has described as the currently monopolistic regime, but also allows “fair and equitable” revenues for the government.

“We support the approved version in the House of Representatives, House Bill No. 5727, as it delivers on these two reform goals,” the company said, referring to the version that Malacañang is pushing.

Earlier this week, Sen. Ralph G. Recto presented to the plenary a new version prepared by the committee on ways and means, which he chairs.

This “Senate Bill No. 3299 effectively levels the playing field by removing the classification freeze of old brands and collapsing the premium and high tiers,” BAT noted. “Thus, we are supportive of this component of the bill.”

Currently, the classification of brands means that new entrants pay higher taxes compared to those already existing before the prevailing law was passed in 1997.

However, BAT said SB 3299 lacks the second aspect that the company supports as “good corporate citizens (that) have always advocated for the best interests of the countries we operate in.”

“It is a well-known fact, that the excise revenues generated by the tobacco industry in the Philippines have not kept pace with the growth in other sectors over the years, and this was to a very large extent the result of the inequitable and unreasonably low excise system,” BAT said.

Last Wednesday, Recto said that under the latest sin tax bill, cigarettes could yield between P9.8 billion and P14.8 billion in additional revenues during the first year of implementation. At the same time, alcoholic drinks could contribute P5.2 billion to P7 billion.

But based on HB 5727, the Bureau of Internal Revenue expects incremental excise tax revenues to amount to P31.4 billion in the first year of sin tax reforms, including P26.9 billion from cigarettes, P1.4 billion from distilled spirits, and P3 billion from fermented liquor.

“We respect the Philippine legislative process, and hope and believe that it will deliver a level playing field, fair and equitable taxation, and above all a result that best serves the interests of the country,” it added.