House to hold public hearings on minimum cigarette price

MANILA, Philippines - The House of Representatives is set to start joint public hearings on the proposed Minimum Cigarette Price (MCP), which provides a floor price for cigarette products to curb smoking among the youth as well as tax evasion.

The MCP bill, authored by Romblon Rep. Eleandro Jesus Madrona, aims to complement the Picture Health Warning Law, which mandates the display of government-approved graphic warnings on cigarette packs to discourage smoking.

Madrona said a pricing approach should be introduced since youth smokers would still buy affordable cigarettes no matter how gory the pictures displayed on their favorite cigarette brand are.

The measure seeks to impose a minimum price of P38 per cigarette pack beginning this year, P44 by 2016 and P51 by 2017. Starting 2018, the floor price for cigarette products would be adjusted every year by four percent.

Cavite Rep. Elpidio Barzaga Jr. and other lawmakers endorsed the passage of the bill, saying the measure “hits two birds with one stone – it discourages people from smoking and at the same time will bring more money to the national coffers, increasing in the process our health care fund.”

“Of course, we want the bill’s primary objective of deterring youth smoking to succeed; after all, as public officials, we must put forward the best interest of the nation at heart and in this case, their health,” Barzaga said.

Lawmakers said that zeroing in on the youth’s limited buying power is a good strategy to reduce smoking prevalence among the 18 to 24 age bracket and discourage prospective young smokers from initiating tobacco use.

The bill was originally referred to the trade and industry committee chaired by Las Piñas Rep. Mark Villar.

Villar has started consultations with tobacco stakeholders and regulators prior to holding formal hearings on the proposed measure.

However, in a letter to Majority Leader and Mandaluyong Rep. Neptali Gonzales Jr., Marikina Rep. Romero Quimbo said the measure should be referred to his ways and means panel since it also tackles aspect of revenue generation and tax evasion.

A perusal of the bill would show that its provisions are closely related to the provisions of Republic Act 10351 or the Sin Tax Law, which was previously spearheaded by the ways and means committee, Quimbo said.

Quimbo earlier said that revenues from the MCP could help defray the projected losses from the recently-enacted law providing higher tax exemption on bonuses and other benefits received by workers.

He said even proposals to lower individual and corporate income tax could be offset by revenues from the MCP through higher value-added-tax (VAT) collections.

In a previous estimate, an MCP regime during the first year would yield P1.5 billion in additional VAT revenues as prices of cigarettes become higher.

According to Bureau of Internal Revenue data from January to June 2014, excise tax collections on sin products amounted to P46 billion, exceeding the government’s target of P11.04 billion by 31.6 percent.

Tobacco products had a bigger share of the total, amounting to P28.18 billion. The amount is 44.4 percent higher than the P19.51 billion in 2012.