Higher taxes on cigarettes approved by House

MANILA, Philippines – The House of Representatives last night approved a bill that seeks to impose higher taxes on cigarettes and keep the present taxation system that levies two rates based on two sets of prices.

After just two hearings by the ways and means committee chaired by Quirino Rep. Dakila Cua and two days of floor debates, the House voted on second reading to approve Bill 4144 authored by Rep. Eugene Michael de Vera of party-list group Arts, Business and Science Professionals.

The chamber is expected to pass the measure on third and final reading next week before Congress goes on its month-long Christmas vacation. It will then transmit it to the Senate.

The bill would amend the Sin Tax Law, under which the system of two tax rates based on two sets of prices (low and high) would be scrapped and a uniform tax of P30 per pack regardless of the retail price would be imposed beginning Jan. 1, 2017.

It is clear that the Senate will not have time next week to consider the proposed amendatory law.

In the meantime, the single tax the present law provides will kick in starting Jan. 1.

Under the De Vera bill, cigarettes with a retail price of P11.50 per pack would be levied an excise tax of P32, while those selling above P11.50 would have a tax of P36 per pack.

Questioned by opposition Rep. Edcel Lagman last night, Cua admitted that the Department of Finance, Bureau of Internal Revenue, National Tax Research Center and Department of Health all opposed Bill 4144.

Cua said only the National Tobacco Administration supported it.

Lagman said even tobacco farmers’ groups, non-governmental organizations and tobacco producers, including industry giant Philip Morris-Fortune Tobacco, were against it.

He said only two cigarette makers – Mighty Corp. and Anglo-American Tobacco – were in favor of keeping the two-rates system.

“I hope this bill is not favoring an individual tobacco producer or a group of producers,” he said.

The Cua committee temporarily shelved the bill that seeks to reduce income tax to give priority to the De Vera proposal.