House gives two-tier cigarette tax measure the green light

The House of Representatives on Tuesday approved on third and final reading a bill seeking to put in place a two-tier tax rate on cigarettes.

Through nominal vote, 176 lawmakers voted in favor of House Bill 4144, which aims to amend Republic Act 10351 or the Sin Tax Reform Act.

Meanwhile, 30 lawmakers voted against the measure and three abstained.

Under the current law, which took effect in 2013, a unitary tax rate of P30 would be imposed on each pack of cigarettes, regardless of the net retail price.

But the proposed amendments in HB 4144, authored by ABS party-list Rep. Eugene Michael de Vera, the two-tier system places a tax rate of P32 per pack on low-end cigarettes and P36 on premium cigarettes.

In explaining her "no" vote, Taguig Rep. Pia Cayetano said the proposed P32 tax per pack for cigarettes with a net retail price of P11.50 and below, and P36.00 for packs selling at P11.50 and above are still low.

"If the intention is to get more revenue, it is more logical to simply increase to a higher rate the unitary P30.00 (P31.20 if adjusted to inflation) applicable to all cigarettes. Why not P40.00, 50.00 or more?" Cayetano noted.

She reiterated that the Department of Finance and the Department of Health, the lead proponents of the sin tax law, were opposed to HB 4144.

Cayetano said the Sin Tax Reform Act would not be disadvantageous to local tobacco farmers.

"They will not be affected by existing law because our tobacco products are merely used for fillers, whether the cigarette is cheap or expensive," said Cayetano.

Albay Rep. Edcel Lagman said HB 4144's two-tier system would be more difficult to administer than the unitary system, and more conducive to tax evasion and other tax irregularities.

He described the measure as "anti-health" because two-tier taxation would simply encourage smokers to switch brands and buy lower-priced cigarettes, instead of quitting smoking since.

"Consequently, HB 4144 defeats the purpose of reducing the number of smokers as smoking is the single biggest cause of cancer in the world," said Lagman.

On the other hand, Dinagat Islands Rep. Kaka Bag-ao noted the effectiveness of the law that HB 4144 seeks to amend – Sin Tex Reform Act – has not yet even been assessed.  That's why she gave the bill the thumbs down.

"Congress should've listened to the DOH, DOF and Bureau of Internal Revenue since they are in the best position to evaluate the efficacy of the Sin Tax Law," Bag-ao said. — VS, GMA News