Palace: Tobacco lobby's paid ad vs sin tax bill 'misleading'

A Palace official has come forward Wednesday to say that a full-page paid ad that appeared in at least two major broadsheets Wednesday opposing the administration’s proposed sin tax measure is "incorrect" and "misleading." The full-page text advertisement was paid for by at least 18 tobacco cooperatives and proclaimed in bold letters: “Mr. President, 1,000 percent is too much.” The body of the ad lamented that if passed, the sin tax bill would raise prices of a typical pack of cigarettes from P15 to P50, which “a lot of smokers would find unaffordable.” But Presidential Spokesperson Edwin Lacierda debunked the ad's claims, saying that should the sin tax bill be approved, the increase in taxes will not be immediate. “The appearance of that ad would imply that upon the passing of the sin tax bill into law the increase will be immediately 1000 percent. That is incorrect,” Lacierda said in a briefing. “Tobacco companies remain profitable wherever they are,” he added. Lacierda explained that under the provisions of the proposed sin tax measure, the increases will be gradual, with an implementation period from the current year up to 2016. “Just to give you a perspective on the sin tax rates, currently [the rate] is at P2.72. Next year, it will be P12. That’s hardly 1000 [percent] and, after that, P22 [and so on] until it reaches in 2016 to P32,” Lacierda said. Lacierda added that the even after the implementation of additional taxes, cigarettes in the Philippines will remain the cheapest in the region.   “The price of cigarettes in the Philippines would still be among the lowest in the region. For instance, just to give you an example, the lowest price [in the country for a pack of] cigarettes right now, a local brand, is P15. With the sin tax increase, it will be at P26,” Lacierda said, saying the amount is far from the mentioned P50 in the advertisement. Lacierda also argued that the bill will not kill the competitiveness of the industry, enumerating how neighboring countries put on a much higher tax on tobacco products.   “In Thailand, a pack of the lowest-priced brand would be P72 and in Vietnam it will be P26. In Indonesia, the lowest price would be P48.50. So obviously it’s still going to be the lowest in the region,” Lacierda said.   The ad also lamented that the proposed bill will be particularly burdensome to tobacco farmers. However, Lacierda said the opposite would be true, as the bill provides for safety nets for these farmers. “[As for the] concern for the tobacco farmers, again, we have already stated that 15 percent of the revenue will be devoted to the safety nets, so if it is at P40 billion—assuming that we are able to generate a revenue of P40 billion—P6 billion of that will be for the tobacco farmers,” Lacierda said. Signatory to WHO tobacco control Lacierda also pointed to the fact that the Philippines is a signatory to the World Health Organization framework on tobacco control as a pressing reason for the early passage of the bill. “[In] that particular health treaty of which we have ratified and of which we are a member—there are 177 countries that are signatories to this particular convention—they have recommended an excise tax on tobacco products to at least 70 percent of the price [or cigarettes],” Lacierda said. Despite this, Lacierda noted that the proposed sin tax measure would only raise the retail price by about 60 percent.   “It is even less than what is being proposed by the World Health Organization convention on tobacco control. In some other countries, it’s already at 75 percent of retail price,” Lacierda said. — BM, GMA News