MANILA, Philippines - A bill has been filed in Congress seeking to set the minimum price for all tobacco products at P38 per pack.
Romblon Rep. Eleandro Jesus Madrona filed the proposed measure to discourage the youth from taking up the habit, as well as address tax evasion by tobacco firms.
Madrona proposed to set a minimum cigarette price (MCP) of P38 beginning January 2015, P44 by January 2016 and P51 by January 2017.
Thereafter, consistent with the increase in excise taxes, the MCP shall likewise be increased annually by four percent effective January 2018, Madrona proposed.
Excise tax, value-added tax (VAT). production cost, operating cost and annual inflation were taken into account in computing the MCP, the lawmaker said.
In filing the bill, Madrona said while the passage of the excise tax reform law allowed the government to raise additional revenues, it has failed to significantly reduce smoking incidence, specially among the youth.
“Considering that this law was enacted on the premise that higher excise taxes would also bring better tax collections and would make smoking less affordable for smokers, particularly the youth, additional solutions need to be brought to bear so the country can address these unintended consequences with a view to benefit the general public,” Madrona pointed out.
He cited a survey commissioned by the Department of Health that showed that while there was a reduction in consumption in some socio-economic classes and age groups, the overall incidence has not significantly decreased, as there are still some 20 million smokers today in the Philippines, the same number of smokers as in 2011.
Based on the same social Weather Station (SWS) survey, 45 percent of smokers merely switched to cheaper brands when the tax increased, he explained.
“While the newly enacted Graphic Health Warning Law aims to further discourage youth smoking by attaching scary pictures on packs, it needs to be complemented with some form of price discipline,” Madrona said.
Madrona said his proposed measure intends to promote the right to health of the people and recognize the vital role o the youth in nation building.
The bill when passed shall make it unlawful for any manufacturer or importer to sell cigarettes less than the MCP.
When cigarettes are sold per stick, the aggregate price of the individual sticks in a pack should not be less than the MCP per pack.
Without prejudice to the power to issue temporary closure or temporary restraining order for a period of not more than 10 days, the agencies may, after due notice and hearing, issue cease and desist orders, suspend or revoke any permit, license or registration or order the permanent closure of any establishment violating the provisions of the measure.
The bill likewise requires tobacco manufacturers and importers to submit quarterly declarations of their selling prices or as frequently as may be required under the implementing rules and regulations.
From only seven percent, Bulacan-based cigarette firm Mighty Corp. saw its market share jump to over 20 percent last year by selling its products for P1 to P1.50 per stick, thereby eating into the market share of Philip Morris Fortune Tobacco Corp. (PMFTC), a joint venture between global giant Philip Morris and taipan Lucio Tan’s Fortune Tobacco.
This strategy has worked well for the Wongchungking family-owned company, as low-income consumers turned to lower priced cigarette brands to satisfy their nicotine craving.
Mighty is under investigation by tax and customs authorities for allegedly evading payment of taxes and engaging in anomalous transactions, which include technical smuggling and under-declaration of imported tobacco leaf and raw materials.
However, Mighty insisted that those allegations are undocumented and that in fact it is up to date in its payments to the Bureau of Internal Revenue and the Bureau of Customs.