MANILA, Philippines – A member of the powerful House ways and means committee has accused Finance Secretary Margarito Teves of being “insensitive” to the plight of the two million people dependent on the tobacco industry by pushing for yet another round of excise tax increases on cigarettes despite adjustment in the tax rates only at the start of the year.
During a public hearing conducted by the ways and means committee last Monday, Teves made another desperate pitch to lawmakers to pass their proposal to re-structure the current excise tax structure and impose a single rate each for all cigarette and alcohol products.
Authors of the various bills mirroring the DOF proposal, led by Quezon Rep. Danilo Suarez, have waved the white flag acknowledging that the current Congress does not have material time to pass a controversial tax measure with elections just around the corner, prompting Teves to make a personal, last-ditch appeal to Congress.
But instead of gaining sympathy, Teves was met by a chorus of flak not only from congressmen coming from tobacco producing provinces but also from lawmakers worried over the impact of displacing two million Filipinos during a period of economic slump. At least three tobacco farmers groups also raised their objections before the committee and branded the DOF bill as an “anti-tobacco workers bill.”
Deputy Speaker Eric Singson, Antique Rep. Exequiel Javier, chairman of the ways and means committee, Cagayan De Oro Rep. Rufus Rodriguez and Parañaque Rep. Roilo Golez were unanimous that the DOF proposal would not achieve its revenue enhancement goal but would backfire and virtually kill the tobacco industry.
The current excise tax law (Republic Act 9334) provides a four-tier structure for tobacco products and prescribes rate increases every two years beginning 2005 until 2011.
With tax rates increasing by as much as 11 percent beginning Jan. 1 this year, Singson said there has been a sharp decrease in actual revenue collections of the government based on figures submitted by the DOF itself to the committee.
Based on figures from the Bureau on Internal Revenue, Singson said tax collections for the first quarter this year fell by 35.62 percent compared to the same period last year. BIR figures showed collections for the first quarter of 2008 at P6.2 billion but the figure dramatically dropped to an alarming P4.21 billion this year when the rates were adjusted.
Another round of increases, according to Singson would only worsen government revenue collections. “Imposing higher taxes would only force people not to buy which would lead to lower collections. This will defeat the purpose of these bills to increase revenues,” Singson pointed out.