Bill sets minimum cigarette price at P38 per pack

MANILA, Philippines - A lawmaker wants Congress to prescribe a minimum price of P38 per pack of cigarettes.

In filing House Bill 5013, Romblon Rep. Eleandro Jesus Madrona said a floor price for cigarettes “could lessen, if not eliminate, the smuggling of cheap cigarettes, and curb tax evasion.”

“It also has a health dimension since it aims to prevent unscrupulous companies and their agents such as wholesales and retailers – and even smugglers – from offering cheap products to the detriment of the youth,” Madrona said.

“Any cigarette manufacturer that sells products at cheap prices by avoiding tax payment is doing so against the laws of the country and is simply producing and selling products to lure smokers, including the youth,” he added.

He said a minimum but prohibitive cigarette price could discourage minors from smoking.

Madrona pointed out that the proliferation of cheap cigarettes defeats the purpose of Republic Act 10351 or the Sin Tax Reform Law, which Congress passed to bring down the number of smokers through higher taxes that should have increased tobacco prices.

However, he said that price wars among tobacco companies have brought down prices, with some products being sold at less than the taxes paid for such products.

The bill sets a minimum price of P38 per pack or P1.90 per stick starting on Jan. 1, 2015. The price would increase to P44 and P51 in 2016 and 2017, respectively.

Starting in 2018, the floor price for cigarettes would be adjusted every year by four percent.

The measure prohibits tobacco companies from launching marketing gimmicks such as price discounting and buy-one-take-one promos.

The suggested floor price does not include the excise tax and the 12-percent value added tax (VAT).

Under the measure, starting on Jan. 1, 2015, the tax on cigarettes shall be P21 per pack if the net retail price (excluding excise tax and VAT) is P11.50 and below, and P28 per pack if the retail price is more than P11.50.

It will go up to P25 and P29 on Jan. 1, 2016. A single tax rate of P30 per pack will be imposed starting on Jan. 1, 2017. The rate will be increased by four percent every year beginning on Jan. 1, 2018.

Citing a recent Social Weather Stations survey commissioned by the Department of Health, Madrona said the number of Filipino smokers has remained the same at 20 million.

He said the survey showed that 45 percent of smokers merely switched to cheaper brands when the higher taxes took effect two years ago.