Congressmen, governors refute Chavit claim on sin taxes

MANILA, Philippines - Northern Luzon congressmen refuted yesterday the claim of Ilocos Sur Gov. Luis “Chavit” Singson that tobacco production in their region has benefitted only the manufacturers and not the farmers.

Representatives Victor Ortega of La Union, Eric Singson Jr. of Ilocos Sur and Carlos Padilla of Nueva Vizcaya said farmers are benefitting from competitive prices manufacturers offer for their tobacco leaf produce.

Makers of tobacco products buy even the poor quality leaves since these could be used for low-priced cigarettes, Padilla said.

He said farmers also share from taxes collected by the National Government from the so-called “sin” products.

“The law allots a certain portion of such taxes to farmers through their provincial governments,” he said.

 Ortega has warned his colleagues who are pushing for higher sin taxes that these could price local products out of the market, a scenario that could lead to the death of the tobacco industry, displacing hundreds of thousands of farmers.

 “We have at least 300,000 farmers who will be affected. That is not counting their families, and factory workers and their families,” he said.

Even Gov. Singson’s own congressman-son did not agree with his statement.

Ilocos Sur Representative Ryan Singson said their province became a first-class local government unit primarily due to the additional income generated by the farmers from tobacco sold to cigarette manufacturers.

He said if the plan to substantially increase sin taxes pushes through, tobacco farmers would have a difficult time finding buyers for their produce, particularly low quality leaves.

Aside from congressmen from his region, Chavit Singson’s governor-colleagues disagreed with his statement and his support for higher sin taxes. A similar statement has been made by Mindoro Oriental Gov. Alfonso Umali.

“It is unfortunate that Governors Singson and Umali made those statements considering that they come from tobacco growing provinces and have tobacco farmers as constituents, not to mention that their provinces are recipients of funding as their share of tobacco tax collections,” said Ilocos Norte Governor Imee Marcos.

“I am appealing to my fellow governors to consider the plight of at least 2.9 million tobacco farmers, workers and their dependents before supporting the bill on higher sin taxes,” she said.

“What would happen to local tobacco farmers if we deprive them of their main livelihood?” she asked.

Cagayan Governor Alvaro Antonio said the proposed huge tax increase would greatly prejudice low-priced cigarettes, which mainly use local tobacco for production.

“If the bill is passed, the tax for locally made low priced cigarettes will increase from P2.72 per pack to P30 per pack by 2014, while premium cigarettes would increase by only six percent from P28.30 per pack to P30 per pack.  Low priced cigarettes will have to be sold at P40-45 per pack to absorb the tax which is almost the same price as premium brands,” he said.

“At this price, it will become unaffordable to consumers who will then just buy premium or imported cigarettes. This will wipe out the small players who mainly manufacture low-priced cigarettes and thus cause a massive drop in the demand for local tobacco,” he said.

La Union Governor Manuel Ortega said those who are not from tobacco producing provinces should not speak for tobacco farmers.

“We are from tobacco producing provinces and the welfare of millions of tobacco farmers dependent on the tobacco industry is our utmost concern,” he said.

He said La Union is among the five provinces with the largest shares of tobacco tax revenues, having received some P730 million from 1997 up to 2007.

For his part, Isabela Gov. Faustino Dy lll said he found the proposed 1,000-percent tax increase “too drastic.”

“For sure, this will bleed the tobacco industry dry and will lead to its collapse in the future, leaving our farmers jobless and their families hungry,” he said.