From: Manila Standard Today
The Northern Luzon Alliance in the House of Representatives on Thursday expressed optimism that the Senate will pass a “better” version than the House’s watered-down version of the proposed sin tax reform law. But manufacturer of low-priced cigarettes warned that the blackmarket will thrive should Congress approve the watered-down version that Rep. Victor Ortega of La Union, a member of the alliance, appealed to the senators to keep an open mind and heed calls for a “proportional increase” of excise tax on cigarette products.
“We do not want a ridiculous increase in excise tax in tobacco products. We are not opposed to the sin tax reform bill per se, what we want is a gradual increase in tax rates,” Ortega told the Manila Standard.
A study conducted by the Associated Anglo American Tobacco Corporation, a group of manufacturers of low-priced cigarettes, showed that the market volume of tobacco would fall by as much as 50 percent while the blackmarket would boom as a result of a proposed tax increase of 708 percent on tobacco products.
Blake Dy, vice president of the AAATC, also lashed out at critics who tried to downplay the possible impact of the tax hike on cigarettes.
“Why do we keep on thinking that this bill will be good for the farmers? Why aren’t we thinking about the worst effects of this tax hike?,” Dy said in a statement sent to the Manila Standard.
Dy warned of the possibility that black market will proliferate in the country should the tobacco tax hike bill is passed into law.
He said that the high tax to be charged on cigarettes will force consumers to shift to cheap smuggled cigarettes.
“The worst case would be that the legitimate cigarette market will go down by 50 percent, while the best scenario on market reduction is 26 percent. Further, smuggling and counterfeits will take the place of legal cigarettes, said Dy, whose company manufactures low-priced brands,” said Dy, citing an AATC study.
Ortega, meanwhile, said that the Senate is expected to act on several bills seeking to restructure the country’s excise tax when Congress resumes session in July.
