Solon urges BIR to set minimum cigarette price

MANILA, Philippines -  A lawmaker is urging the Bureau of Internal Revenue to impose an ad interim minimum price on cigarettes to sustain the gains of the Sin Tax Law.

Romblon Rep. Elejandro Madrona has revived calls for the setting of a minimum cigarette price, saying the BIR has powers under the National Internal Revenue Code of 1997 to ensure the successful and proper implementation of the law, which jacked up excise taxes on cigarettes.

Madrona proposed to set a minimum cigarette price of P38 which would be reaised to P44 by January 2016 and P51 by January 2017.

He said with the election fever gripping Congress, the most likely accomplishment of both chambers is passing the 2016 national budget.

“While Congress hits fever pitch because of the upcoming elections, it behooves for the BIR to fill in the momentary legislative paralysis and ensure that no cheap cigarettes would be accessible to the youth,” Madrona said.

Madrona filed the proposed measure to discourage the youth from taking up the habit, as well as address tax evasion by tobacco firms.

The lawmaker said the gains of Sin Tax Law are being threatened by the continued proliferation of cheap cigarettes – contraband or counterfeit – in the domestic market.

“If cheap cigarettes remain accessible to the youth, then something must be introduced or strengthened to ensure the successful implementation of the Sin Tax law that we voted upon as the ultimate anti-smoking law,” said Madrona, who also chairs the House accounts committee. 

Setting a floor price for cigarettes would make it easier for the BIR to flag tobacco firms and retailers that are selling cigarettes way below their combined tax and manufacturing costs – indications of tax evasion, smuggling or even counterfeiting.

The move, according to Madrona, would boost sin tax collections which amounted to P11.9 billion as of August this year, P8.6 billion of which accounted for tobacco excise taxes.

Under Republic Act 10351, cigarette packs priced below P11.50 would be imposed a tax of  P21, up from P17 last year, while those that cost P11.50 and above are slapped P28, slightly up from P27 in 2014.

“We’re asking BIR to take a pro-active stance on this urgency before the situation gets worse and considering that a national elections is coming up and that a new government would be installed thereafter,” he said.

“We just can’t go to an electoral sabbatical while cigarette companies lure our youth with their very cheap and dangerous products,” Madrona added.

Proponents of the law in Congress and Malacanang have  argued that raising tobacco excise taxes would increase cigarette prices and, thereby, make it unaffordable to all Filipino smokers.

Madrona also noted that new market studies have pointed to a significant decline in smoking “but much could still be achieved if more tools are applied to hasten the downtrend.”

Based on Madrona’s House Bill 5013, the minimum cigarette price per pack, the minimum cigarette price per pack would increase annually by 4 percent effective 2018.