MANILA, Philippines — Tobacco farmers will continue to benefit from the incremental revenues from higher excise tax to be imposed on tobacco products starting next year, Sen. Sonny Angara said yesterday.
Angara, sponsor of the bill that raised excise taxes on tobacco products, said the measure approved by the Senate and the House of Representatives last week provides that up to 20 percent of the incremental revenues from the additional duties will go directly to 23 tobacco producing provinces to fund programs that will provide support for tobacco farmers and workers.
“Under the measure, 15 percent of excise tax on locally manufactured Virginia-type cigarettes but not exceeding P17 billion will go to Virginia tobacco producing provinces, while five percent but not exceeding P4 billion will be allocated to burley and native tobacco producing provinces,” Angara said.
He said support for tobacco farmers can be in the form of inputs, training, safety nets, infrastructure, livelihood and agri-industrial projects.
According to the National Tobacco Administration, at least three tobacco types are grown in 23 tobacco-producing provinces in the Philippines.
Virginia tobacco is grown in Ilocos Norte, Ilocos Sur, Abra and La Union.
Burley tobacco is grown in Pangasinan, La Union, Abra, Isabela, Cagayan, Tarlac and Occidental Mindoro; while the native or dark tobacco is grown in Pangasinan, La Union, Cagayan, Isabela, Nueva Vizcaya, Quirino, Capiz, Iloilo, Cebu, Negros Oriental, Leyte, Zamboanga del Sur, Bukidnon, Misamis Oriental, North Cotabato and Maguindanao.
The new tobacco tax measure will raise the excise tax for every cigarette pack from P35 to P60 over the next four years.
The starting rate of P45 will be implemented in 2020, followed by a series of annual P5 increases until the rate reaches P60 in 2023. Thereafter, the rate automatically increases by five percent.
In resorting to gradual tax increase instead of an immediate P25 bump to the current rate, Angara said lawmakers did a delicate balancing act considering the competing interests of the government, health advocates, the cigarette industry and tobacco farmers.
He said the tobacco tax hike bill is an important legislation that would not only help reduce deaths and disabilities due to smoking, but would also generate much-needed revenues for the government’s universal health care program.
However, Angara said the impact of raising the excise tax on the livelihood of tobacco farmers must also not be ignored.
“Our tobacco farmers have not been faring well since the Sin Tax law was enacted in 2013, as some tobacco production has gone down by over 20 million kilos since then,” he said.
He said thousand of farmers and their families depend on tobacco farming.
Angara said Congress is providing up to four years of graduated excise tax increases so that more tobacco farmers can shift crops.