Tobacco firm backs gov’t on tax issue

The country’s oldest tobacco company will support any decision that the government will make on the cigarette tax issue.

“Mighty Corp. (formerly La Campana Fabrica de Tabacos) has always been fully supportive of the government’s efforts to raise revenues from tobacco products, promote health and support local farmers,” company president Edilberto Adan said on Monday.

“We only wish to point out that House Bill No. 4144 is the most advantageous measure for the government because it is expected to optimize revenue generation, address the concerns of health advocates and provide local tobacco farmers with a steady stream of livelihood opportunities,” Adan said in a statement.

He stressed that a two-tier tax system on cigarettes would benefit the government in terms of revenues. “Not only will it benefit local farmers, it will also continue to help the economy,”  he added.

House Bill No. 4144 proposes the adoption of a two-tier system in place of a unitary tax rate which is supposed to be implemented starting January next year.

Under Republic Act No. 10351 or the Sin Tax Reform law, the excise tax rates on cigarettes—currently at P25 per pack for low-priced brands and P29 per pack for premium brands—will be replaced by a unitary tax rate of P30 per pack.

HB 4144 aims to amend Section 145(c) of the National Internal Revenue Code which mandates the imposition of the unitary tax rate.

Adan said the success of RA 10351, which has been hailed by institutions like the World Bank as a model tax measure, and praised by health advocates, could be traced to the introduction of a two-tier system for excise taxes.

He explained that the government was able to collect record revenues on the strength of the tax system.

“We believe that HB 4144 will be a boost to the Duterte administration’s tax reform program,” Adan said.

Some members of Congress have also argued that the unitary tax system was a regressive tax policy because it would be applied indiscriminately to all consumers irrespective of economic class.

The House Ways and Means Committee approved the proposed measure last week, saying the two-tier system supports the constitutional directive for Congress to adopt a progressive taxation system that considers the taxpayer’s buying capacity.

Legislators also said HB 4144 would address the decline in sin tax collections and curb smoking prevalence specially among the youth and the poor.

Data from the Department of Finance showed that there has been a significant downtrend in excise tax collections over the past year, making it imperative to adopt HB 4144.