Policy reforms group fights for unitary tax rate on cigarettes

An activist policy group on Tuesday proposed a P40 single tax rate on cigarettes by 2018, in a bid to further strengthen the existing sin tax law.

“We’re proposing and calling on our legislators and all our health champions, all Filipinos, to rally behind a unitary tax rate of P40 by 2018,” said May-i Fabros of the Action for Economic Reforms (AER) at a forum in Pasig City on Tuesday.

This is a “pro-health and pro-Filipino people” amendment to the current provisions of the sin tax law. It will cause smoking prevalence in the country to go down and generate additional government revenues from cigarettes, Fabros noted.

The amendments to the Sin Tax Reform Act of 2012 are more ideal than House Bill 4144, which seeks to amend the current law by retaining a two-tier tax system.

Enacted in 2012, the sin tax law is envisioned to curb cigarette and alcohol consumption and, at the same time, enhance revenue for government programs and reduce the categories or tiers of cigarette taxes from five to two and eventually to one by 2017.

But in House Bill 4144, the taxes on low-end cigarettes will be pegged at P32 per pack and at P36 for premium cigarettes. The House has approved the bill on third and final reading.

Fabros said House Bill 4144 only “weakens” and “dilutes” the sin tax law.

She argued that a two-tier tax structure that House Bill 4144 seeks to retain only encourages smokers to switch to cheaper brands – instead of quitting – defeating the purpose of the law.

In 2014, data presented at the forum showed that around 12.8 percent of smokers shifted to cheaper brands instead of quitting.

If a unitary tax system had been imposed before, the prevalence of smoking in the country would have been 20.1 percent – instead of 23.3 percent – which is equivalent to 1.9 million less smokers.

A two-tier tax system will compel tobacco companies to produce cheaper brands to avoid higher taxes, the group argued.

Smokers will not only be encouraged to continue their habit but also smoke more, Fabros said.

She said the importance of a unitary tax system is the imposition of matching taxes on cigarettes regardless of brand.

“[A unitary tax rate] means the government does not care whether it’s a cheap price, what brand you are. As long as you’re a cigarette, you will be treated the same way because you kill and harm Filipinos,” she said.

Since House Bill 4144 has already been approved in the House, the Senate would be more responsive to their call, according to the group.

“We’re hoping that it would be a different space and we’d like to believe that hope springs. And we’re hoping to get that same kind of momentum, that pivot in 2012,” Fabros said. — VS, GMA News