DTI: Bill to regulate cigarette price has good, bad effects

CEBU, Philippines - Imposing a floor price on cigarette products at P38 per pack as part of the efforts to curb smoking has both negative and positive effects to consumers and manufacturers, according to the Department of Trade and Industry-7.

Romblon Representative Eleandro Jesus Madrona filed House Bill 5013 that aims to implement a minimum cigarette price of P38 per pack starting January next year. The floor price will increase on a staggered basis to P44 per pack by 2016 and P51 per pack by 2017.

Zaide Bation, head of the Consumer Welfare and Business Regulation Board, said the move of Madrona has both negative and positive impacts on the cigarette industry.

She said that due to the price increase, there would be less consumers, explaining that if the price is favorable to growers and manufacturers, then they will benefit from the bill. If not, then business will be slow, she said.

“Kung gamay na lang og mamalit mas daghang health ang ma-save sad unya na’y posibilidad nga mohinay ang manufacturing,” Bation said.

The bill, however, still has implementing guidelines. DTI-7 will also depend on the stand of the central office.  Madrona filed the bill as part of the efforts to curb smoking amid the proliferation of cheap cigarette brands in the market.

In his bill, starting 2018, the floor price will increase by 4 percent a year.

If the measure becomes a law, manufacturers, retailers and importers will be prohibited from selling cigarettes below the MCP.

Violators will face not less than six months to a maximum of five years imprisonment and a fine ranging from P50,000 up to P2 million, depending on the quantity of cigarettes.

Under Republic Act 10351 or the sin tax reform law, a P17 excise tax has been imposed on low-priced cigarette brands this year. High-end brands have been slapped with a P25 excise tax. By 2017, the unitary tax will rise to P30 and will have a 4-percent yearly increase.

As the chair of the House Committee on Accounts, Madrona said that the bill not only seeks to improve government tax collection through the imposition of higher excise taxes, but also prevent the increase of number of smo-kers, especially among the youth.

Based on reports, overall smoking incidence had not decreased following the passage of RA 10351 in 2012. It was noted that 45 percent of smokers merely switched to cheaper brands when the excise tax was increased, which explains the lack of notable decline among tobacco consumers.

As of 2011, there is an estimated 20 million smokers in the Philippines. — Ria Mae Y. Booc/ATO (FREEMAN)