Lawmaker bats for 4-tier excise tax system

MANILA, Philippines - A House leader prefers the existing four-tier excise tax system over the proposed unitary excise tax system, saying the former effectively addresses the varying market needs for alcohol and tobacco products.

Deputy Majority Leader and Valenzuela City Rep. Magtanggol Gunigundo said cigarette products for instance are diverse to address market demands for low-end to high-end priced products.

“Following the ability to pay principle, those who prefer high end products should pay higher taxes, hence the need for four tiers,” said Gunigundo.

He also cited the need to determine how much consumers will react to possible price increases due to higher taxes to be imposed by the government.

“We need to see the Department of Finance market study on probable consumer behavior,” he said.

A DOF comparative estimation of these bills submitted earlier to the House committee on ways and means showed a minimal increase in the prices of local cigarettes if the present four-tier excise tax system is retained and the automatic tax increase every two years continues.

On the contrary, the price of local cigarettes could go up by as much as 83 percent if a unitary excise tax system is adopted.

Earlier, Gunigundo urged the House committee on ways and means to conduct an inquiry into the measures undertaken by the DOF and the Bureau of Internal Revenue (BIR) to implement the administration’s “no new taxes” policy.

In House Resolution 1334, Gunigundo said it is through the spirit of transparency that the DOF and BIR should disclose the measures they have taken to implement the administration’s “no new taxes,” tax administration reform and related revenue enhancement policies.

“In the spirit of transparency, it is imperative to make public the initiatives and actions taken by the BIR and the DOF to implement the said presidential directives, including but not limited to such measures as provided for by law, specifically those which the BIR commissioner and the secretary of finance are mandated to exercise under Section 8 of the National Internal Revenue Code of 1977, among others,” Gunigundo said.

Pending before the House committee on ways and means are seven proposals seeking to restructure the excise taxes on alcohol and cigarette products.