ECOP airs concern over passage of 2-tier cigarette tax

MANILA, Philippines – The country’s employers have expressed concern on the passage of House Bill 4144, saying that the measure — which proposes to retain the present two-tiered system on cigarette taxation, would encourage Filipino workers to become heavy smokers as they would only shift to lower priced cigarettes.

The Employers Confederation of the Philippines (ECOP), which accounts for some four million out of the seven million workers employed in the country, said their concern is the safety of their workers.

“We’re joining the call of business groups because our concern is the health of our workers,” ECOP president Donald Dee told The STAR over the weekend.

ECOP is among 14 business groups which banded together to call for the full implementation of Republic Act 10351 or The Sin Tax Reform Act of 2012 instead of amending it through HB 4144.

The Federation of Philippine Industries (FPI), for its part, voiced concerns on the proposed measure, saying it would only worsen smuggling.

FPI chairman Jesus Arranza said a two-tier system would translate to more corruption because the system would be difficult to administer.

“If there is a choice for a lower tax, people will just mis-declare,” Aranza said in a separate interview.

Arranza also raised questions on how swift HB 4144 was passed after only two hearings — on Nov. 28 and Dec. 5.

“I’m really wondering because there are more important bills that remain pending in Congress. Why the hurry to pass this?” Arranza pointed out.

ECOP and FPI are among the 14 local and foreign business groups that have expressed their support to the full implementation of the Sin Tax Law.

The influential Makati Business Club spearheaded the call to support the full implementation of the Sin Tax measure which will mandate a unitary tax of P30 per pack for all cigarette products regardless of brand starting on Jan. 1, 2017.

The other business groups are the Financial Executives Institute of the Philippines, the Management Association of the Philippines, the Federation of Filipino-Chinese Chambers of Commerce and Industry Inc., Foundation for Economic Freedom, Philippine Chamber of Commerce and Industry Inc. and foreign chambers, Canadian Chamber of Commerce, European Chamber of Commerce of the Philippines, American Chamber of Commerce of the Philippines, Japanese Chamber of Commerce and Industry of the Philippines Inc., Australian-New Zealand Chamber of Commerce Philippines Inc. and the Korean Chamber of Commerce Philippines.

House Bill 4144 intends to keep the current two-tier tax system on cigarette products, which under RA 10351 is set to be unitary beginning Jan. 1, 2017.

The two-tier proposed rates are P32 per pack for cigarettes that have a net retail price of P11.50, while cigarette packs priced above P11.50 will be taxed P36.

In contrast, the Sin Tax Reform law mandates the single tax rate of P30 per pack starting next year.