Anglo-American firm bucks proposed hike in excise tax on tobacco products

MANILA, Philippines - An Anglo-American firm is opposing the proposed increase in excise tax on tobacco products, saying the move will also increase the prices of cigarettes.

The Associated Anglo-American Tobacco Corp. (AAATC) said while the government is pushing for the unilateral hike in excise taxes by up to 72 to 83 percent, it has no program yet to help cushion the impact of such an increase on tobacco farmers and factory workers.

AAATC vice president Blake Dy appealed to Congress not to “kill the goose that lays the golden egg.”

He noted that excise tax collections on tobacco products have been increasing over the past years.

The Bureau of Internal Revenue (BIR) had reported that it surpassed its excise tax collection in 2010, which reached P67.2 billion against the goal of P62.4 billion.

Of this figure, the BIR collected P31.6 billion from the tobacco industry, more than 22 percent above its goal of P25.8 billion.

 “For us it is incomprehensible why Congress would seek to punish rather than encourage a sector that regularly delivers such a large amount of income to its coffers and provides work for millions of Filipinos across the archipelago,” Dy said.

In a recent hearing by the Congressional Oversight Committee on the Comprehensive Tax Reform Program, BIR Commissioner Kim Henares told lawmakers that of all the major tax classes which the bureau collects, only the excise tax posted positive collection last year. 

Henares said income tax collection last year at P489.22 billion did not reach the P492.07-billion target while VAT collections were short by 18.94 percent, with actual collection at P172.21 billion against the goal of P212.45 billion.

“Rather than unfairly shifting more of the tax burden to the tobacco industry which has faithfully fulfilled its obligations, Congress and government should instead focus on plugging these tax leakages and fulfilling the new administration’s promises of no new taxes,” Dy said.

The AAATC appealed to the lawmakers to be sensitive to the plight of the tobacco farmers.

It called upon Congress to adopt either House Bill 3666 of Antique Rep. Paolo Javier, which seeks to increase the excise tax rates by adjusting these to inflation and adding P0.17 per pack across all tiers, or House Bill 3332 of Ilocos Sur Rep. Eric Owen Singson which seeks tax increases every two years.

“The proposed bills come from legislators who keenly understand our situation as they both come from tobacco producing provinces. Theirs’ is a balanced approach to both fiscal and agricultural policy that leaves room for the sustainable growth of the industry while satisfying the government’s revenue needs,” Dy said.