Tobacco farmers back two-tier tax

The National Federation of Tobacco Farmers Association and Cooperatives (NAFTAC) is throwing its full support for House Bill (HB) No. 4144, which seeks to retain the two-tier tax system on cigarettes, calling it the “true profarmers measure and propoor.”

Naftac president Mario E. Cabasal also called on his group’s members to focus on the real issues surrounding the bill, saying the biggest concern is the fate of the country’s tobacco farmers and their  livelihood.

“We support HB No. 4144 because it is the true pro-farmers measure. We had already voiced our position when the bill was being discussed in Congress and nothing has changed,” Cabasal said in a statement.

“I call on our members not to be influenced by the reports that are coming out regarding HB No. 4144. What will be good for the farmers is the measure that will ensure our continued survival. In our view, that is HB No. 4144,” he added.

Cabsal said a unitary tax rate, which is mandated under Republic Act (RA) No. 10351, or the Sin Tax Reform law, would be detrimental to local tobacco farmers.

“A unitary tax rate will benefit only the premium cigarette brands, which are the foreign brands. They will just import higher quality tobacco leaves. This means we the local farmers who produce low-grade tobacco will suffer the most,” he said.

“Locally produced tobacco leaves are mostly low grade. Our fear is that if a unitary tax rate is imposed, local production will be affected. There will be less purchases of our produce and our livelihood will be greatly affected. This is what we told Congress (during the deliberations on HB No. 4144),” Cabasal added.

HB No. 4144, authored by party-list Rep. Michael B. De Vera, seeks to amend Section 145(c) of the National Internal Revenue Code of 1997, which imposes a unitary tax rate of P30 per pack for all brands starting January 2017.

The current tax rate mandated under RA No. 10351 is P25 per pack for low-priced brands and P29 per pack for premium brands.

HB No. 4144 seeks to reinstate the two-tier system in place of the unitary tax but with a higher tax rate of P32 per pack for low-priced brands and P36 per pack for premium brands, with an annual increase of five percent every year.

Cabasal said it would be the unitary tax rate that would be detrimental to tobacco farmers.