Ilocano farmers favor two-tier cigar tax hike

Burgos, Ilocos Sur — Ilocos farmers in this country’s biggest Virginia tobacco-producing region have aired their full support to the newest proposed bill in congress imposing a two-tier tax increase on cigarettes claiming this for the sustainability of the tobacco industry.

The House Bill 4144 seeks to amend Section 145 (c) of the National Internal Revenue Code in which the measures is proposing that a pack of cigarettes with a net retail price of P11.50 and below have an excise tax of P32, while cigarette packs that cost more than P11.50 be taxed P36.

The bill was approved by the House panel following the two committee deliberations on November 28 and December 5.

HB Number 4144 is essentially aiming to block the full implementation of Republic Act No. 10251, the landmark Sin Tax Reform Law of 2012 passed under the Aquino administration. The RA 10351 mandates that a unitary tax rate of P30 be imposed on all cigarette packs – regardless of price – by 2017.

Farmer’s woes

Long-time tobacco farmer Mario Cabasal, 55, said the implementation of the unitary tax for the cigarette is detrimental to the local tobacco industry and this would probably kill the Virginia tobacco industry.

“If the unitary tax would be implemented, no more tobacco traders would probably buy a low-grade tobacco leaves being produced by our local tobacco growers because the cigarette manufacturers probably cease to produce local class cigars,” said Cabasal, who represented the 55,000 tobacco farmers nationwide for being the president of the National Federation of Tobacco Farmers Association and Cooperatives (NAFTAC).

“If the unitary tax on the cigarette would be implemented, the smoker would prefer to buy higher quality cigars because the price disparity between the high-class cigarettes and low-class cigarettes would be minimal,” added Cabasal.

According to Cabasal, the giant foreign cigarette company based in the Philippines is currently not buying the reject class of leaves being produced by the traditional tobacco growers.

“These lower classified leaves comprise 20% to 30% of the leaves in one single stalk of growing tobacco,” said Cabasal. “Fortunately, only the local cigarette manufacturers have been buying all the tobacco leaves’ classes produced by our tobacco farmers for the production of the low- classed cigarettes,” added Cabasal.

Appeal to lawmakers

He appealed to lawmakers and the Duterte administration to consider the passage and approval of the HB 4144 saying that this bill will help sustain the country’s tobacco industry.

“We need to sustain the country’s tobacco industry because tobacco growing remains as the main cash crop of the farmers in Ilocos Region; tobacco farming is still the lucrative source of livelihood and income of the Ilocos farmers after rice season considering its price protection and its ready market,” explained Cabasal, who till a 1.5-hectare farmland in Barangay Sulvec, Narvacan town for native tobacco growing.

Cabasal noted that the tobacco industry is continuously pouring the government coffers with a big amount from sin tax collection. He learned from a reliable source that in 2015 alone, the national government has collected R141 billion from sin taxes in which 70% of it was sourced from tobacco products.

It was also reported that in 2015, tobacco excise taxes contributed around R100 billion in government revenues, up from R32 billion in 2012.

He feared that there’s a brewing concern he received from congress that once the R30.00 unitary hike on cigarette tax is imposed, some lawmakers have the plan to propose to increase it by R40.00.

Pro-farmer tax reform

For farmer Anastacio Calibuso of Barangay Dayanki, Burgos, Ilocos Sur said that the proposed two-tier tax increase on cigarette products is more justified and is pro- tobacco farmer.

“It is fitting to have differed tax increase of the low-class cigars from that of the high-class cigars because it is not proper to have the same tax increase for items with different qualities,” Calibuso said.

On the explanatory note proposed HB 4144, bill author and Arts Business and Science Professionals Representative Eugene De Vera cited that the aim of the unitary tax rate on cigarettes is to level the playing field in the cigarette industry and to promote competitiveness.

Meanwhile, veteran Ilocano lawmaker Vincent “Bingbong” Crisologo (Quezon City 1st District Representative) has reiterated that HB 4144 is in accordance with the 1987 Constitution specifically Article VI, Section 28 that requires Congress to evolve a progressive system of taxation.

Crisologo interpreted the specific section of the Constitution as any product must be taxed according to classification in which, “if the product is classified premium it must be meted with a higher tax and if a product is non-premium it must be taxed lower.”

Resource :    http://news.mb.com.ph/2017/01/22/ilocano-farmers-favor-two-tier-cigar-tax-hike/