Cigarette maker urges review of excise tax bill

MANILA, Philippines – JT International (Philippines) Inc. (JTIP), manufacturer of Winston cigarettes, welcomes the efforts of the leadership of the House of Representatives to consider the feedback of industry stakeholders on the House ways and means committee excise tax bill.

JTIP is optimistic about the pronouncements of Speaker Feliciano Belmonte that changes could be introduced to the excise tax bill during plenary debates. The House ways and means committee approved last week a substitute bill HB 5727 that moved the current tax structure from four tax tiers to two tax tiers on cigarettes.

The company, however, is calling on Congress and the Department of Finance to revisit the structure as well as the provisions of the bill which include among others very steep increases between 250 and 808 percent.

“While the bill still needs some adjustments to ensure a moderate and predictable as well as equitable tax structure for the tobacco industry without a total denormalization, JTIP is glad to learn that Congress is willing to listen to the many concerns raised by the various stakeholders” says JTIP general manager Manos Koukourakis.

JTIP explained that moderate and reasonable tax increases for all cigarettes will also avoid unintended consequences.

For instance, under the current tax system, Winston is taxed at P7.56 per pack; but under the amended HB 5727, Winston would be lumped together with high-priced and premium brands and slapped with a 374 percent tax increase at P28.30 per pack in the first year of the bill’s implementation. On the second year, the tax increase would spike to 396 percent at P30.00 per pack. This means smokers would likely have to pay double for their cigarette brand. 

“We hope that Congress would consider the negative impact of structural changes and excessive tax. We are not averse to the implementation of tax increases, but these should involve equitable tax structures and moderate and predictable excise increases to ensure that legitimate brands remain competitive and that they are not edged out by cheap, smuggled and counterfeit cigarettes” adds Koukourakis.

The company said the Philippines would suffer the same dire consequences that other economies have undergone after imposing excessive taxes on tobacco products.

These include countries like Malaysia, Hong Kong and Singapore, which continue to struggle with unabated tobacco smuggling as a result of the steep tax increases they have imposed on legitimate cigarette brands.