Region 1 execs unite vs cigarette tax plan

CABUGAO, Ilocos Sur – The chief executives of the four provinces comprising Region 1 have united and endorsed a resolution rejecting a government plan to come up with a uniform tax rate for all classes of cigarettes.

This was learned from Ilocos Sur Gov. Deogracias Victor “DV” Savellano, chairman of the Regional Developmet Council (RDC) saying all four provinces – Ilocos Norte, Ilocos Sur, La Union and Pangasinan – will be adversely affected by the plan.

Savellano said that the RDC, in its meeting held recently, passed the resolution which also expressed support to the move of House Deputy Speaker Eric Singson to oppose the Finance department-initiated tax move once it is formally submitted to Congress.

It was learned that the planned tax scheme would generate higher revenues for the government.

Singson who heads the Northern Luzon Alliance (NLA), a formidable bloc of congressmen from the northern regions, said any attempt to amend the existing law mandating a four-tiered tax system on cigarettes would be rejected by his group.

Under the present set-up, cigarettes are taxed according to their class with the imported cigarettes paying highest followed by locally manufactured premium brands and the ordinary or low class cigarettes.

The excise tax impositions range from P25, P10, to P2.50 a pack.

According to Singson, the Finance dept.-sponsored measure would slap a uniform P14 excise tax on cigarettes regardless of class or brand.

The deputy speaker warned that if their products are charged P14 a pack from the present P2.50, manufacturers of ordinary and low class cigarettes will not stand the competion and will close shop leaving 60 percent of the tobacco production of northern farmers with no ready buyers.

“This (uniforn tax rate) will kill the tobacco industry,” Singson said.

The low-priced ordinary cigarettes utilize low grade tobacco leaves as their raw material while the premium brands use top grade leaves.

Admnistrator Carlitos Encarnacion of the National Tobacco Administration (NTA) earlier said that a tobacco plant has a normal yield consisting of 40 percent of top grade leaves and 60 percent low grade.

He said that a huge portion of the income of tobacco farmers come from the sale of their low grade leaf outputs.   

In the RDC resolution, Savellano and his fellow governors – Michael Keon of Ilocos Norte, Manoling Ortega of La Union and Amado Espino of Pangasinan – asked the government to reconsider its plan.     – Teddy Molina