No palace support, no new sin tax law - Suarez

MANILA, Philippines - There will be no new law increasing taxes on the so-called “sin” products like cigarettes and liquor without a clear support from Malacañang, the leader of the opposition in the House of Representatives said yesterday.

“If the statement of Congressman Eric Singson Jr. (of Ilocos Sur) is correct, then the sin tax bill is dead,” Minority Leader Danilo Suarez said.

He said many of his colleagues would not vote for higher cigarette and liquor taxes because they are facing an election in May next year.

Singson has said he inquired from the Office of the President and the office of Executive Secretary Paquito Ochoa Jr. on the reported Palace support for the bill of Cavite Rep. Joseph Emilio Abaya, but that he was informed there was no such support.

Singson belongs to the Northern Alliance, which groups Northern Luzon congressmen who are against the Abaya bill since many of their constituents are tobacco farmers.

But Suarez said with or without Palace backing, he would support the Abaya bill because it is similar to his own proposal to reform the system of taxing cigarettes, liquor, and other tobacco and alcohol products. 

Abayan’s Bill 5727 is facing strong opposition not only from Northern Luzon congressmen but from local companies producing tobacco and alcohol products as well.

La Union Rep. Victor Ortega has told a House ways and means committee hearing that at least 300,000 tobacco farmers in the north would be adversely affected by the proposal for higher sin taxes.

A local cigarette manufacturer criticized importer British American Tobacco (BAT) for advocating tax increases in the guise of leveling the playing field.

Blake Clinton Dy, vice president of local producer Associated Anglo-American Tobacco Corp., said BAT’s advocacy “would be akin to putting an amateur boxer in the same ring as Mike Tyson, allowing ear biting, and then calling that a fair fight.”

He said the problem with BAT is that it wants to take advantage of the local market “without putting up a factory, employing workers or buying local tobacco leaves from farmers.”

All the company wants to do is import and sell its tobacco products in the domestic market, he said.

Dy disputed claims that the local market is not fair under the present four-rate tax structure.

He said the existing system was designed “to protect the local industry and further the ends of social justice in ensuring the employment of thousands of Filipino workers.”

“The system accomplishes this by taxing small players at a lower rate versus the high to premium brands, giving us a needed edge in pricing to tap the mass market and overcome the inherent bias for big name foreign brands,” he said.

He warned lawmakers that equalizing the tax treatment of local and foreign cigarette brands would have immeasurable consequences on the tobacco industry, its workers and their families.

“The equalization of taxation between foreign and local players would remove any reason to maintain manufacturing facilities in the Philippines, which will result in factory closures and consequent reduction or elimination of demand for local tobacco entirely,” Dy said.