Labor, farmers appeal to bicam on tobacco excise tax

MANILA, Philippines — Farmers and the labor sector yesterday appealed to the bicameral panel on the proposed Tax Reform for Acceleration and Inclusion (TRAIN) bill to consider their plight before further increasing the tobacco excise tax.

The Trade Union Congress of the Philippines (TUCP), PhilTobacco Growers Association (PTGA) and the Federation of Free Farmers (FFF) expressed their opposition to raise anew the tobacco excise tax, citing the significant reduction in production and huge job losses following the yearly exorbitant hike in tobacco tax since 2013.

Under the current law, tobacco taxes will automatically increase by four percent annually. With these huge increases, tobacco production has fallen from 68 million kilograms in 2013 to 52 million kilograms in 2015, according to the National Tobacco Administration (NTA).

In separate letters to Sen. Sonny Angara, chairman of the Senate committee on ways and means, the groups said that any drastic increase in excise taxes would be damaging to the economic situation of the tobacco farming and labor sectors.

“What the proponents of a radical increase in sin tax fail to recognize is that every time a move to increase the tobacco sin tax is proposed, thousands of tobacco farmers and laborers are faced with the threat of losing their primary source of income and livelihood,” wrote TUCP president Ruben Torres, a former labor and executive secretary.

Torres noted that data from the NTA showed the number of workers in the tobacco industry was reduced by 9,232 farmers in 2015 alone.

Another related NTA report showed there was also a decline in the area of the land planted to tobacco from 38,264 hectares in 2014 to only 32,761 hectares in 2015, or more than 5,500 hectares abandoned.

He said this decrease in employment is supported by the latest Labor Force Survey of the Philippine Statistics Authority, which shows an increase in the country’s unemployment rate from 5.8 percent in January 2016 to 6.6 percent in January 2017, or 2.8 million Filipinos unemployed.

Among the regions, the tobacco-producing Ilocos registered the highest unemployment rate at 8.7 percent.

Torres said the TUCP supports the call of various farmers’ organization in opposing the inclusion of the tobacco tax in Package 1 of the TRAIN bill.

He said that the tobacco industry has already contributed greatly to the national coffers. Despite the tobacco farmers’ contribution to the national income, it is unfortunate that this sector is always targeted as the sole “big” potential source of national revenues for the government.

“Tobacco farmers are still struggling with falls in demand for tobacco because of the huge 340 percent excise tax increases introduced in 2013,” PTGA president Saturnino Distor said.

“Why is tobacco being targeted again? Tobacco excise taxes contributed around P100 billion in 2015, up from P32 billion in 2012. The tobacco sector is giving more than our fair share of the tax revenues for the government,” he added.

FFF president and former agriculture secretary Leonardo Montemayor said “they do not agree” to the moves to extract from the blood of the poor tobacco farmers the needed revenue deficit, considering there are issues that need to be addressed first, including the utilization of funds on the share of the farmers.

Montemayor called for a full assessment of the implementation of the excise taxes on tobacco before increasing it again.

He cited the announcement of British American Tobacco last month that it intended to completely close operations in the Philippines with the loss of several hundred jobs.

The bicameral conference committee – composed of representatives from the Senate and the House of Representatives – is expected to hold its last meetings this week to come up with the final version of the TRAIN.