DOF weighs in on Pacquiao’s excise tax hike bid

The multidivision world boxing champion does not actually need him in his corner but Emmanuel D. Pacquiao, now a senator, has the full support of the Finance Secretary Carlos G. Dominguez III and the proposal to double the excise tax on cigarettes as part of the larger goal to discourage its consumption.

Dominguez said the Department of Finance (DOF) supports Pacquiao’s proposal to levy a higher excise tax on alcoholic beverages and cigarette products under the reform measured dubbed Package 2 plus.

“Yes [to the tobacco excise tax hike] because that’s the right thing to do. Just because you’re getting a bad reaction doesn’t mean your going to stop,” Dominguez said of the mounting resistance to the excise reform measure that had been blamed for the above-target inflation in recent months.

Bills have been filed in the Senate proposing to increase the tobacco excise tax schedule under Senate Bill (SB) 1599 sponsored by Pacquiao and SB 1605 by Sen. Joseph Victor G. Ejercito.

SB 1599 proposes to revise the existing legislation and double the excise tax on cigarettes from the current P30 per pack to as much as P60 per pack, with provisions for an annual increase of 9 percent from the initial 4 percent.

Pacquiao said the proposal should help reduce the so-called prevalence of smoking to only 19.8 percent by 2020, from more than 22 percent at present, based on latest government data, and significantly reduce the burden of extending health care to the smoking segment of the population.

“He has a measure there that conforms to ours. We support his [Pacquiao’s] measure. It does not [involve the] doubling of rates,” Dominguez said.

As for SB 1605, Ejercito proposes to increase the price of cigarettes to as much as P90 per pack this year followed by a 9 percent increment yearly.

The increase proposed levy should help boost the country’s coffers with P80 billion to P90 billion on the first year of implementation alone.

In the first three months this year, the DOF acknowledged the bulk of inflationary pressure that has sent the price of commodities, services and goods higher in recent months arose from the increased excise tax on cigarettes and alcoholic beverages.

The price of alcoholic beverages and tobacco climbed 18.57 percent in March, from only 16.85 percent in February.

“Appropriate adjustments in the price of ‘sin’ products, tobacco specifically, will continue to fuel inflationary momentum in the near term.

However, the government is precisely discouraging the consumption of these products through higher prices, among others,” the DOF said in an economic bulletin on the subject of inflation.

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