Lawmakers from the tobacco-growing provinces in northern Luzon will block the passage of the sin tax reform bill next month unless its proponents agree to a compromise that could water down further the proposed increase in taxes on cigarettes and alcoholic drinks.
La Union Representative Victor Ortega said he met with Speaker Feliciano Belmonte Jr. last week to push the northern Luzon bloc’s proposal to adopt a three-tier tax system for cigarette products in place of the two-tier tax system approved in the House committee on ways and means three weeks ago.
“We are fighting not for any interest. We are fighting for the tobacco farmers,” said Ortega, citing the adverse impact of a two-tier tax system on low-cost cigarettes that use local tobacco as raw material.
“The Speaker will talk to them,” said Ortega, referring to the group of Cavite Representative Joseph E.A. Abaya, author of the sin tax reform bill, House Bill No. 5727.
Debates wrap up by June 7
The bill originally pushed for a single tax rate for cigarettes and alcoholic drinks whether locally made or imported, high priced or low priced, old or new brands.
Belmonte has made a commitment to President Benigno Aquino III to wrap up the ongoing plenary debates and pass the sin tax bill before Congress goes on hiatus on June 7.
Under the revised sin tax bill approved in the committee level, the Department of Finance (DOF) will impose two tax rates for tobacco products and three for alcoholic products depending on the product retail price.
Cigarettes selling for P11.50 per pack and less will be taxed P12 in the first year and P22 afterward. Cigarettes selling for more than P11.50 will be taxed initially at P28.30 and P30 in the second year.
Ortega said the northern bloc wanted to have the same tax structure as alcoholic products that have three tax brackets to cover low-, middle- and high-priced brands.
There are currently four tax brackets for sin products, with old and established local brands enjoying a tax advantage over new and incoming imports. The DOF wants this tax advantage abolished and the sin tax simplified in order to boost revenue collection. Gil C. Cabacungan