CEBU, Philippines - With the Sin Tax Law taking effect starting January 1, vendors and wholesalers complained they had no other choice but to increase the prices, a situation aggravated by a low supply of the products.
Retail chains, on the other hand, clarified that there is no hoarding on their part as manufacturers had stopped the distribution of products since December, resulting in a limited stock of tobacco and alcohol products.
Tomasa Bacalso, a 43-year old street vendor, said she raised prices of cigarettes due to low supply from retail chains and the effectivity of the Sin Tax Law which is also known as Republic Act No. 10351.
Last December 31, she had only bought 10 packs of two brands of cigarettes since there are no more packs available on display. She observed sales decline over the past few days with buyers complaining of the high prices of cigarettes.
Bacalso, a cigarette smoker for 20 years now, said she will minimize her consumption of cigarettes to accommodate her customers’ demands given the limited supply.
But a distributor of cigarettes who requested not to be named said that the Sin Tax Law has not affected his business since there are still buyers of cigarettes.
“Bisag nisaka ang presyo, naa man gihapon mopalit. The more ang mga tawo mopalit like mga sari-sari store owners. You see, we are still selling and wala mi mag-hoard,†he said. (Despite higher prices, people are still buying.)
He noted that those addicted to smoking have two options; either they still go for the same brand even with the price increase or prefer a cheaper and lower brand.
Benjamin Pino, a 61-year old food vendor, also sells beer and liquor in his carenderia. They already felt the price increase on their end starting November 1. Since then, he noted the decrease in the demand for alcoholic beverages. Before, he used to sell 2 to 3 cases of beer but is only able to sell one case or none at all at present with the inflation.
Meanwhile, tobacco vendors remained hopeful that with the implementation of RA 10351, more consumers will finally patronize the traditional tobacco.
82-year old Viviana Bayato sells tobacco at P5 to P10 per leaf. With her daily sales of P200 to P300, she only earns a profit of P100.
Rosalinda Lamosa has been selling tobacco in the Carbon market for 10 years and preferred to sell cigarettes at the same time to sustain her business. In a day, she sells 20 leaves and earns P1 from each leaf. Regular tobacco smokers age from 30 to 60 years old, she said. She cited that she used to sell 5 packs of cigarettes in a day but has now decreased from one to three packs recently with the implementation of the Sin Tax Law. Her usual earnings of P100 a day has now been reduced to P60.
She acknowledged the advantages of the Sin Tax Law but confessed that it may negatively affect her way of living.
Meanwhile, local retail chain owners made clear that they do not hoard their products but revealed that they are out of stock since major suppliers stopped the delivery before RA 10351 was implemented.
Robert Go, owner of the owner of the Prince Warehouse retail chain, projected a sure decline of consumption now that the sin tax law has taken effect but will be evident after a few weeks.
He pointed out that in normal cases; retailers are forced to increase their prices due to competition. He added that sari-sari store owners tend to buy more to have a windfall profit.
He further clarified that several retail chains do not offer cigarettes anymore as of now since cigarette companies have stopped the delivery of supplies in the middle of December.
As of this moment, he noted that the suppliers have not yet handed a price list to the retailers that the latter have to follow.
“Many retailers are also out of stock due to uneven supply. We are still waiting for the new price list with the remaining little stocks that we have. Until it is handed to us, retailers cannot sell. Only then, cigarette products will be on display once the supplier gives their new price list and starts to deliver again,†he stated.
In the later part of December, Go observed a huge sales on cigarettes since several vendors and sari-sari store owners bought more than what they need.
An official of La Nueva Supermarket and Pharmacy who requested not to be named also echoed the same sentiments with Go.
“Companies suddenly stopped the delivery of supply early December so wa mi makaandam og pondo to serve the customers. This may be their way of anticipating for price increase. Kami wa man pud mahimo at the mercy of the supplier sad,†he told The FREEMAN.
He added that they had not received any explanation from the suppliers who simply stopped serving the delivery of products.
For liquor and alcoholic beverages, he cited though that there are still stocks available even if manufacturers have started to tighten the supply.
He pointed out that since they did not receive the official price list from the supplier themselves, prices will remain the same.
Michael Cambal, a chain smoker and heavy drinker at the same time, stated that he will not stop his addiction to cigarettes and alcohol even with the implementation of sin tax law.
For 20 years, he considers cigarettes and liquor as his own version of “stress relieverâ€.
In a day, he consumes 15 sticks to one pack of cigarettes. He starts smoking as soon as he wakes up and continues it in the afternoon until in the evening before he sleeps.
During drinking sessions that usually occur once or twice a week, he admits never getting drunk even if he has consumed 6 large-sized bottles of beer.
Starting on the first day of the year, the tax on cigarettes packed by hand, that comprise the bulk of tobacco products sold in the country, is P12 per pack for those with a net retail price (excluding the excise tax and the 12-percent value added tax) of P11.50 and below. For those with a higher retail price, the tax is P25.The rates will go up to P17 and P27 in 2014, P21 and P28 in 2015, and P25 and P29 in 2016. There will be a single rate of P30 per pack starting 2017, rising by four percent every year.
For fermented liquor (beer), the tax is P15 per liter if the net retail price is P50.60 and below per liter, and P20 per liter for those with a higher price.
The rates will rise to P17 and P21 in 2014, P19 and P22 in 2015, and P21 and P23 in 2016. A uniform tax of P23.50 will be imposed starting in 2017, which will increase by four percent every year.
For distilled spirits, the tax is 15 percent of net retail price plus P20 per proof liter, rising to 20 percent plus P20 in 2015. In the case of wine, the tax is P200 per bottle of 750 ml (milliliter) if its net retail price is P500 or less, and P500 per if the wine costs more.
Additional sin tax collections for 2013 would amount to P33.96 billion, P42.82 billion in 2014, P50.63 billion in 2015, P56.86 billion in 2016, and P64.18 billion in 2017, for a total of P248.49 billion in five years.
RA 10351 allocates 15 percent of incremental revenues for programs that would benefit tobacco farmers, 80 percent shall be allocated for universal health care under the national health insurance program, the attainment of the Millennium Development Goals (MDGs) and health awareness programs, and for medical assistance, hospitals and health enhancement facilities nationwide. — /JPM (FREEMAN)