Phased increase in cigarette tax to prevent smuggling — Gatchalian

Sen. Sherwin Gatchalian. INQUIRER.net file photo / CATHY MIRANDA

MANILA, Philippines — The phased hike on cigarette excise taxes in tranches will help address the threat of smuggling of tobacco products, Senator Sherwin Gatchalian said Wednesday.

Gatchalian said this amid fears that the increase in excise taxes on cigarettes would encourage consumers to instead buy cheaper products from the black market, where the government cannot generate taxes.

“The general trend is to curb smoking overtime but cognizant of the unintended consequences which is the illicit trade that might come in, so that’s the reason why we had this four-tranche increase up to P60,” he said in an interview with ABS-CBN News Channel.

Gatchalian explained that if, for instance, the government imposes a P100-increase in taxes effective immediately, consumers would automatically resort to buying products in the black market.

He said the phased increase also gives a period for the government to “catch up” and increase its capability to curb smuggling.

President Rodrigo Duterte had earlier certified Senate Bill No. 2233, seeking to increase the excise tax on tobacco products as urgent, but lawmakers only have a few days to pass the law before going on break.

READ: Duterte certifies as urgent bill on higher tobacco excise tax

According to Gatchalian, the Philippines has one of the lowest prices of cigarettes at around P79 per pack, relatively lower than the P365 in Cambodia and P552 in Singapore.

“What we are doing here is to also bring it to a level where we are at par with our Asean neighbors,” he said.

Meanwhile, the senator also assured that the proposed measure is a “balancing act” and will not sacrifice the earnings of tobacco farmers in the country. (Editor: Julie Espinosa)