The National Tobacco Administration (NTA) is
opposing higher excise taxes on tobacco products, which it argued would
result in lower production and more farmers being displaced.
In a position paper submitted to Sen. Juan Edgardo M. Angara, the NTA maintained that it “would not recommend further increases on tobacco excise taxes” as the sector have already suffered so much since the “sin” tax law was enacted in 2012.
“Further increases in the prices of cigarettes will impact more on the buying/manufacturing sectors, which have an effect on their production and will eventually result in more job lay-offs, in production as well as in the retail,” the NTA said in the paper, which was obtained by the BusinessMirror.
“The demand for tobacco leaf, which constitutes about 56 percent annual average for the last five years, will likewise decrease, thus affecting the tobacco farmers, which ever since [have] enjoyed increasing prices per kilo and ready market for their produce,” it added.
The NTA disclosed that one local tobacco buyer has ceased operations since Republic Act 10351—Sin Tax Reform law—took effect and led to an “unfavorable business environment.”
“[It was] due to continued business losses; [the company] has terminated [the] majority of its employees, not to mention the displacement of tobacco farmers with which they had a contract-growing arrangement,” it said.
Since 2012, demand for tobacco products have fallen by at least 40 percent, according to the NTA, an attached agency of the Department of Agriculture.
NTA data obtained by the BusinessMirror showed that tobacco output has declined by 26 percent in 2017 to 48.179 million kilograms from nearly 65 million kilograms in 2012.
Likewise, NTA data showed double-digit contractions in the number of Filipino tobacco farmers and the area they plant the cash crop with.
In 2017, the number of Filipino tobacco farmers reached 32,652, a 34-percent reduction from 52,610 farmers recorded in 2012, NTA data showed.
Total area planted with tobacco in 2017 contracted by 37 percent to 22,704 hectares from 36,160 hectares in 2012, NTA data showed.
However, the NTA argued that they would push for safety-net measures for tobacco farmers should the government push through with its plan to hike excise taxes,
“The law should include specific measures/safety net to counteract the economic dislocation or should provide provisions that would promote the general welfare, to ensure that the interests of tobacco farmers, growers, workers and other stakeholders in the tobacco industry,” the paper read.
Earlier, the Philippine Tobacco Institute (PTI) argued that increasing tobacco excise taxes would lead to higher incidence of illicit cigarettes in the country.
Lawyer Carmen Herce, PTI’s representative, pointed out that further excise tax increases on tobacco products will aggravate the incidence of illicit cigarettes, which could go up from 13.3 percent to 14.2 percent in 2019 to 2022, with equivalent revenue losses of about P14.2 billion to P16.8 billion, based on projections from the Euromonitor International.
In end-February, the Department of Finance (DOF) announced that it is joining an anti-tobacco lobby by the Department of Health, as well as supporting the proposal of a boxer-solon to increase excise tax on cigarettes.
The DOF said results reveal smoking prevalence in the country could go down by an estimated 17 percent if the excise tax on cigarettes is increased to P60 per pack, as proposed by Sen. Emmanuel D. Pacquiao.
The DOF said Pacquiao’s proposal, if followed, will bring down cigarette consumption and lead to 3.2 million adults quitting smoking.
Senate Bill 1599, authored by Pacquiao, aims to increase the excise tax on cigarettes, regardless of brand or price, to P60 per pack in the first year of implementation and an additional 9 percent per year thereafter.