Move to amend Sin Tax Law snowballs

MANILA, Philippines - Businessmen have joined some lawmakers in pushing to amend Republic Act 10351 or the Sin Tax Law as they claimed the measure has not significantly contributed to lowering cigarette consumption.

Francis Chua, an official of the Federation of Filipino-Chinese Chamber of Commerce and Industry, said there is a need to revisit the law to see if it is meeting its intended purpose.

Chua said if the law is not effective in raising the additional taxes the government has programmed, there is a need for a revision.

“As long as the entire exercise can bring more taxes to government, it serves its purpose. If not, a revision in the law is in order,” said Chua, a known advocate of anti-smuggling and good governance.

Lawmakers are also having second thoughts about the law passed last year, which they said is not producing the desired results in terms of lowering smoking consumption.

Marikina Rep. Miro Quimbo, House Ways and Means Committee chairman, said “while the Sin Tax Law maybe succeeding as a tax measure, it is apparently failing as a health measure.”

Citing data from the Department of Health, Quimbo said the law that adjusted upward the excise tax on cigarettes has not discouraged smokers to kick the habit.

“I am concerned about this because this has been presented as a health measure, particularly in the Senate where the debates had been more intense than in the House,” he said.

During a recent hearing at the House of Representatives on the Sin Taw Law, House Assistant Majority Leader Rep. Paolo Javier said smoking incidence as of June 2013 – six months after the new sin tax rates were rolled out – remained unchanged at 51 percent compared to the 50 percent incidence in December 2012.

“This phenomenon, wherein smoking incidence is increasing despite the substantial increase in excise taxes and significant drop in tax paid or legitimate volume, can only be attributed to the sale and distribution of contraband or illicit cigarettes,” Javier said.

Javier has filed a House resolution calling for the review of the Sin Tax Law in relation to the impact of smuggling or tax-evasion in cigarettes and its obvious failure to curb smoking.

A separate industry study also showed that smoking consumption even slightly jumped to 14.13 sticks per smoker a day in the second quarter of 2013 from 13.53 sticks per smoker in the first quarter.

Health advocates, which have been pushing for higher sin tax rates to drive prices up and discourage consumption, are pinning the blame on the proliferation of one-peso brands as buyers only shifted to the super cheap brands.

Mighty Corp. is the dominant player in the one-peso cigarette stick market. Authorities are looking into the operations of the tobacco company to see how it can sell prices at P1 per stick.

Industry estimates show that from less than five percent pre-sin tax share in the market, P1 brands now have a 40 percent market presence, which could reach 60 percent in 2014.

However, Mighty has vehemently denied engaging into unscrupulous practices.

In earlier statements sent to The STAR, Mighty said it can afford to sell low because it has lower production costs because as a Filipino brand it does not have to pay royalties to foreign brand owners.