Tobacco farmers oppose hike in 'sin taxes'

CANDON CITY, Ilocos Sur, Philippines – Tobacco farmers are up in arms over proposed hikes in “sin taxes”, particularly on tobacco and alcohol, being introduced in Congress.

Tobacco farmers backed by Ilocos Sur officials are frowning over the proposed bill seeking to restructure the excise tax collected from alcohol and tobacco, claiming such moves “stunts their economic growth and eventually kills them.”

Ilocos Sur tobacco farmer-leader Benjamin Sarmiento claims House Bill 5727, authored by Rep. Joseph Emilio A. Abaya “is not favorable to the tobacco industry.”

Abaya’s bill was tagged by the Legislative Executive Development Advisory Council (LEDAC) as a priority bill.

But according to Sarmiento, “If the bill will be passed and be approved, the tax for locally made high quality cigarette will be increased from P12 per pack to P30 per pack until 2014, while the premium imported cigarettes would only increase from P28.30 per pack to P30 per pack.” With such, he explained, “the importers are greatly benefited considering that only 40 percent from the total volume of cigarette produced in the country are high quality and the remaining 60 percent are low quality.”

If the bill becomes a law, Sarmiento adds, locally produced tobacco will rot while the imported ones will flood the market. “The saddest part is, the market and demand of our low quality tobacco will probably be decreased and eventually this might lead to the death of our local tobacco industry.”

Sarmiento trooped with at least 5,000 Virginia tobacco farmers from Ilocos Sur and Ilocos Norte to the provincial capitol of Ilocos Sur to ask President Benigno Aquino III to junk the proposal.

Ilocos Sur tobacco farmers are also appealing to Finance Secretary Cesar Purisima, who is also from the province, to further study the impact of HB 5727.

Provincial officials led by vice governor Deogracias Victor Savellano are fully backing farmers against HB 5727 which also contains the Department of Finance (DOF) proposal for a unitary excise tax system.

“We do not agree and cannot accept HB5727 of Rep. Abaya, which is being pushed by Secretaries Butch Abad and Finance Secretary Purisima. HB 5727 will destroy the tobacco industry and kill the livelihood of our people,” the local officials said in their letter forwarded to the House of Representatives Committee on Ways and Means.

Ilocos local officials likewise threw their support behind the current excise tax structure on alcohol and tobacco products, saying it allows these sectors to grow while generating a more stable and predictable revenue for the government.

Ilocos officials also expressed support to the sub-committee report no. 6 of Ilocos Sur Representative Eric G. Singson Jr. which responds to the government’s call for additional revenues without sacrificing the livelihood of some nine million people engaged in the alcohol and tobacco industries.

The approved subcommittee report cites that increases of the tax rates ranging from four to 10 percent will be imposed on the four tax tiers over five years with the lowest tier absorbing 10 percent. The increase will be done every other year over a five year period.

HB 5727 seeks to abolish the tried and tested four tiered excise tax structure in favor of a unitary system, officials in tobacco-producing provinces said.

The Abaya bill, seeks to impose a 1,000 percent increase on the excise tax rates of the low-priced brand which accounts 60 percent of the country’s entire tobacco industry’s volume.

The National Tobacco Administration (NTA) disclosed that 2.7 million families are dependent on the country’s tobacco industry.