House OKs 2-tiered taxation on cigarettes

The House of Representatives on Tuesday approved on third and final reading a controversial bill imposing a two-tier tax regime on tobacco products, drawing objections from lawmakers who questioned the inordinate haste of its passage.

By a 176-30 vote, with three abstentions, the House passed the measure imposing a tax of P32 per pack on cheaper cigarettes and P36 per pack on premium brands.

The two-tier rate—reportedly favored by Mighty Corp., which mostly produces low-priced cigarettes—is a departure from an earlier version imposing a lower and unitary tax of P30 per pack across the board.

Taguig Rep. Pia Cayetano, in explaining her “no” vote, noted that both the Department of Finance (DOF) and the Department of Health (DOH) had opposed the measure.

“The unitary tax system will make it much easier for the DOF to collect much needed revenues… Having a two-tiered system, making cigarettes cheaper especially for youth is like dangling lollipop to children… That is not doing our countrymen a favor,” she said.

Albay Rep. Edcel Lagman noted that the ways and means committee only took two meetings to approve the bill.

He said the unitary system “is the taxation of choice of so many countries, including Australia, Japan, Ireland and Thailand, and it is considered a best practice globally.”

“All of the principal players in the cigarette manufacturing industry, except Mighty Corp., were against House Bill 4144,” he noted.

Negros Oriental Rep. Arnolfo Teves said the law should be equal to all, arguing that the two-tier taxation meant consumers would gravitate toward the lower-priced cigarette brands.
5 steps backward
According to the DOH, the proposal to amend the Sin Tax Law was a “five-step backward” move for the country’s fight against smoking.

“Everyone rejoiced when the Sin Tax Law was approved. It was considered as three steps forward against smoking. Now the proposed amendment would be five steps backward on our gains,” said DOH spokesperson Dr. Eric Tayag in a press forum.

Tayag stressed that instead of immediately amending the law, there should be an extensive evaluation of the effects first.

Senate ways and means committee chair Sen. Juan Edgardo Angara said his panel was in no hurry to take up the bill and would prefer to study its provisions first. —WITH A REPORT BY TINA G. SANTOS