THE tobacco industry said it supports a pause in excise tax rate hikes and called for more efficient utilization of local governments’ national tax allotments (NTA).
“If they think this moratorium will help the industry, I think it’s worth trying if it works in other countries. Anyway, we’re losing income. Why don’t we try it here?,” National Tobacco Administration (NTA) Administrator and Chief Executive Officer Belinda S. Sanchez told BusinessWorld on Monday on the sidelines of the 2nd International Tobacco Agricultural Summit
She was referring to House Bill 11279, which proposes to suspend the annual 5% increase in tobacco until 2026, replacing it with 6% adjustments every two years starting in 2027. The bill also aims to deter smuggling.
Asked about the likelihood of the bill passing, Ms. Sanchez said: “I don’t know. A lot of people are blocking it. Hopefully, it will continue.”
In a speech at the summit, she said that the continuing proliferation of illegal tobacco is causing a decline in government revenue.
“This reduction in funds limits the resources available for essential public services, particularly universal healthcare. Moreover, proceeds from illegal tobacco sales are often linked to organized crime, further threatening national security,” Ms. Sanchez said.
“We need to have a pause and then because we’re not making the Filipino safer because they’re still smoking, except they’re smoking cheaper and more harmful products,” Winston Uy, president of Universal Leaf Philippines, Inc. said at a forum during the summit.
Mr. Uy said higher tax rates could encourage the resort to illegal tobacco products, leading to lower tax collection to fund health services.
Bienvenido S. Oplas Jr., president of the Minimal Government Thinkers, said the Laffer curve applies to tobacco, to the effect that higher tax rates lower overall revenue.
He also said that the optimal tax rate based on the tobacco excise tax is P50 per pack.
“Reliance on alcohol-tobacco taxation to fund the Universal Health Care is wrong. It is doublespeak to ask people to avoid alcohol-tobacco then (raising billions) from smokers and drinkers to fund the health establishment,” he said.
He called for “zero earmarking of ‘sin taxes’ for universal healthcare,” he added.
Nestor Casela, Deputy Administrator for Operations at the National Tobacco Administration, called on the Bureau of Internal Revenue, Bureau of Customs, and Philippine Economic Zone Authority to harmonize guidelines for the economic zone locators trading in agricultural and tobacco products.
He also called on the Department of Budget and Management to regularize the release of funds for technical and marketing support.
Meanwhile, the advocacy group Sin Tax Coalition urged Finance Secretary Ralph G. Recto “to fulfill his mandate of efficiently managing the government’s financial resources by rejecting the proposal to lower tobacco taxes.”
The group estimated that the National Government will potentially lose P27.5 billion in revenue between 2026 and 2030. — Aubrey Rose A. Inosante