NGO hits Philip Morris on 'sin tax' issue

MANILA, Philippines - The Action for Economic Reforms (AER) criticized yesterday Philip Morris Philippines Manufacturing Inc. for flip-flopping on its position regarding sin taxes.

The non-government group, which supports moves to raise excise taxes on alcohol and cigarettes, said that Philip Morris previously lobbied for a single-tier tax system back in 2003.

AER senior economist Jo-Ann Latuja cited a 2003 letter, which Philip Morris sent to then President Gloria Macapagal-Arroyo. AER said in the letter that Philip Morris expressed its support to having a single-tier tax system for tobacco.

“This letter confirms our doubts that Philip Morris, which was once an advocate of excise tax reform, is protecting no one but its own personal causes for opposing the similar reform it had fought for in the past,” Latuja said.

Philip Morris is now part of Philip Morris Fortune Tobacco Corp. (PMFTC), which is an entity that merged with Fortune Tobacco in 2010.

PMFTC now corners 94 percent of the Philippine tobacco market.

The cigarette giant is now opposing House Bill 5727, a measure filed by Cavite Rep. Joseph Abaya, which seeks to restructure the current excise tax system on cigarettes and alcohol. The DOF-backed measure, is currently pending in Congress. It calls for the adoption of a unitary excise tax system from the current four-tier classification.

In its three-page letter dated Feb. 5, 2003, Philip Morris said a single-tier system “should result in an increase excise tax collection” and “promote a level playing field for all manufacturers.”

 “In brief, our proposal is that the current four tier specific system should be changed to a single tier specific system over a period of three years,” the letter, signed by former general manager George Farah, said.

The battle over higher sin taxes is again ongoing in Congress. PMFTC on one side is opposing the shift to a unitary tax system on tobacco while the government and new player British American Tobacco are on the other side, pushing for a more level playing field in the industry.

The Aquino administration is pushing for the passage of the Abaya measure, saying that it would yield additional revenues of roughly P60 billion a year from tobacco and alcohol products.