It's a sin to tax heavily

Cigar manufacturers are worried that proposed House Bill 5727, otherwise known as the “sin tax” bill, could kill the cigar industry. In a letter to President Noynoy Aquino, Tabaqueria de Filipinas general manager Tirso Ripoll said the proposed blanket tax increase of almost 12,000 percent for cigars manufactured and sold in the country – at P150 per cigar from the current P1.25 tax rate per cigar – is excessive and too heavy for cigarette manufacturers to bear. Worse, it would have a devastating effect on the livelihood of cigar industry workers who could lose their jobs if manufacturers close shop because of the heavy tax burden. 

One problem with the proposed bill is that the blanket tax rate does not take into account that different cigar types and sizes have different prices – meaning those currently sold at lower prices would increase their selling price at enormous levels – making it prohibitive to customers. For example, a cigar type sold at P312.50 per box of 25s would jump to P4,062.50 per box of 25s under the proposed tax scheme – or a price increase of 1,300 percent.

Tirso said the new tax would “grossly favor” foreign-made cigars since they are already expensive to begin with so the price increase would be minimal. Instead of increasing revenue, government might end up with no taxes from Philippine made cigars because the prices would be overly prohibitive to consumers. In contrast, the tax increase on cigarettes would only be around 136 percent – which Ripoll finds very unfair since cigars should not be put under the same category as cigarettes. In the first place, cigars generally cater to a more upscale clientele who find it more relaxing while they enjoy a sip of cognac in between. 

Cigar making is labor intensive and the good ones are still made in the traditional way – by hand. Over the years, the Philippines has become noted for producing “traditional” cigars comparable to the best in the world. Ripoll said Tabaqueria de Filipinas is one of only two factories making Philippine cigars, the kind that even presidents appreciate. During the visit of former US President George W. Bush to South Korea in 2002, he stayed at the US Ambassador’s residence where then-US Ambassador to Korea Thomas Hubbard kept Tabaqueria cigars. Hubbard gave one to Bush – which the latter thoroughly enjoyed. But of course, Bill Clinton is probably the US president who really “likes” cigars the most. 

Renewed mining interest

The release of Executive Order 79 outlining the government’s new mining policy seems to have given industry players renewed enthusiasm, with foreign investors looking at the Philippines with fresh interest. At the first Philippine Resources Symposium in New York hosted by Murdock Capital Partners, Philex Mining senior vice president for corporate affairs Mike Toledo enlightened the audience (composed of fund managers and investment bankers) about the vast potential of mining in the Philippines, a country that sits on over 7.1 billion tons of metallic mineral reserves.

One positive feature of the mining EO, Toledo stressed during the symposium, is that clear policy directions have been outlined, in particular, the fact that national laws would have supremacy over local laws – something which the Philex executive also emphasized during an interview with Rappler’s Maria Ressa. The new policy also called for the creation of a Mining Industry Coordinating Council, the establishment of mineral reservations accompanied by a directive for Congress to legislate an improved revenue-sharing scheme for government – all of which would give mining industry players – or at least the big ones – an opportunity to demonstrate “responsible mining.” This new EO would allow Philex to show that it is responsible enough to leave an environment better than when the firm first found it, and ensure sustained development for the communities where Philex operates, Toledo said.

Events like the New York symposium – which we were told had the support of the US-Philippines Society as well as the Philippine American Chamber of Commerce – are definitely increasing interest in an industry whose potential contribution to the economy has not been maximized. 

 PAL’s new plane

Philippine Airlines’ new chief executive officer Ramon S. Ang is formally launching the latest addition to its fleet, the new Boeing 777-300ER, at the Makati Shangri-La Hotel next week. Society’s crème de la crème and the “who’s who” in business have been invited to join the celebration.

Delivered three weeks ago, the new triple seven aircraft will feature more exciting business class amenities with a lot of innovations being introduced by the new management. RSA has given himself a tight one-year deadline to bring the flag carrier back to profitability – and he is leaving no stone unturned (and no expenses spared, observers noted) to get PAL soaring high once again.

 Needle in a sandwich

People are familiar with the saying “needle in a haystack,” but six Delta Airline passengers bound for Minneapolis and Atlanta from Schiphol in Amsterdam certainly did not anticipate finding a needle in their Turkey sandwich. One of them who almost swallowed the needle has been brought to the hospital and placed on medication to prevent possible HIV infection. The FBI is investigating the incident to determine whether the incidents are terrorist related or just a sadistic prank by a disgruntled employee from the airline caterer.

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