Tobacco farmers oppose tax hike

MANILA, Philippines — A group of local tobacco farmers has appealed to the government to reconsider the proposal to increase anew excise taxes on tobacco products.

In a letter to the Department of Finance (DOF), Senate, and House of Representatives, the PhilTobacco Growers Association Inc. (PTGA) expressed its opposition against the proposed excise tax hike on tobacco products, given the declining volume of tobacco production over the recent years.

“We, the PhilTobacco Growers Association Inc. (PTGA), which represents more than 50,000 tobacco farmers in the Philippines, are appealing to your office on the proposed further increase in tax on tobacco products,” said the letter in Filipino addressed to Finance Secretary Carlos Dominguez, Senate ways and means  committee chairman Juan Edgardo Angara and House of Representatives ways and means committee chairman Estrellita Suansing.

According to the PTGA, demand for tobacco has been declining due to the successive hikes in tobacco excise tax since the implementation of the Sin Tax Reform Law in 2013. As a result, the group said tobacco production has dropped significantly.

Citing data from the National Tobacco Administration, the group said domestic tobacco production slumped to 48 million kilograms in 2017 from 68 million kilograms in 2013. 

Republic Act 10351 or the Sin Tax Reform law of 2012 increased the excise tax on cigarettes to P30 per pack in 2017. 

The tax was further raised to P32.50 per pack in January this year and to P35 per pack in July, following the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN Law).

Now, the government is pushing anew for another increase in excise taxes imposed on cigarettes as part of its Comprehensive Tax Reform Program.

The Department of Health is pushing the measure proposed by Senator Joseph Victor Ejercito to increase tobacco excise to P90 per pack and impose an additional nine percent hike every year thereafter.

PTGA said this proposal was “overwhelming” given that the proposed increase is more than double the current rate of P35 per pack.

“We do not understand the government’s direction for this industry, which supports the lives of more than three million Filipino families. Members of PTGA and their families have been depending on tobacco for our livelihood for decades,” PTGA said.

According to the group, it has been supportive of President Duterte’s thrust to spur development in the country. Citing data from the Bureau of Internal Revenue, PTGA said the tobacco industry has contributed P126 billion in taxes in 2017.

“Because of that, shouldn’t we be given a chance to recover and take a breather? Shouldn’t other sectors also be urged to pay higher taxes so that they can contribute more to the country’s development?” PTGA said.

Earlier, Health Secretary Francisco Duque said the DOH was supporting the proposal to increase tobacco excise taxes to augment the funds for the proposed Universal Health Care law.

This would allow Filipino families to be automatically enrolled into the National Health Insurance program of the government. They would also be allowed to avail of primary health care services even without identification cards from the Philippine Health Insurance Corp.

Senator Manny Pacquiao, meanwhile, also has a proposal to raise tobacco excise tax to P60 per pack, with a corresponding increase of nine percent every year thereafter. This proposal is the one being backed by the Department of Finance.