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Manila Standard Today - Marcos on Sin Tax: ‘It will wipe out tobacco industry’

In The News
16 November 2012

By Macon Ramos-Araneta | Manila Standard Today

Featured-image-Manila-Standard-TodaySenator Ferdinand “Bongbong” Marcos on Thursday cautioned the government from proceeding with its planned incremental increase on excise tax on the so-called sin products because this would “wipe out” the tobacco industry.

“We’re talking here not only about Bureau of Internal Revenue collection and health issues but the livelihood of tobacco producers and those belonging to the industry like the retailers,” he said.

“We do not kill the goose that lay the golden eggs,” said Marcos, referring to the tobacco industry and the tobacco farmers.

In his interpellation during Thursday’s hearing on the issue, Marcos criticized the bloated figures and wrong assumptions being insisted by Drilon in his sponsored substitute bill that replaced the proposed measure by resigned ways and means committee chairman Senator Ralph Recto.

Drilon failed to respond with his own computation when Marcos presented his figures. Instead, Drilon commanded the Ilocano senator for “doing his homework and research.”

“He studied the issue very well,” said Drilon who added, that “we may not agree, but we accept (Marcos’ points) for the purposes of looking at amendments.”

“We are willing to listen to amendments to ascertain erroneous assumptions. We are not perfect. We may have miscalculated resulting in inaccuracies,” admitted Drilon.

Marcos later said that he might have succeeded in swaying the minds of his colleagues.

“I was able to show them that if they want to increase excise tax, it should not be abrupt,” Marcos told reporters.

He explained that the government cannot achieve its twin objectives in the incremental increase on excise tax on the so-called ‘sin products’ due to wrong assumptions and statistics.

Marcos said he questioned the assumption that the Drilon measure would result to an additional P40 billion in additional revenues contrary to the P15 billion to P20 billion provided in Recto’s recommendation.

“They’re saying in their proposal that the government will collect additional 26.8 billion which I showed in my interpolation. This can’t be realized,” he said.

“They (government) can’t get their dream of generating P40 billion revenues from increased tax on cigarette and alcohol products and can’t reduce smoking prevalence” aside from a possible rise in the smuggling incidence.

He also challenged the assumption of Drilon and the government that consumers will still buy locally-produced cigarettes despite the high increase in prices.

“The consumers are not like that. Of course, they will instead look for cheaper cigarettes,” said Marcos, adding that the same incidents happened in other countries which increased its tax on liquor and cigarettes.

Tobacco is mainly produced in Northern Luzon where Marcos and Senate President Juan Ponce Enrile come from.

Enrile has also been pushing for a ‘fair and reasonable’ increase on the price of cigarettes.

Both Ilocano lawmakers have vowed to protect the tobacco farmers and fight for their right for a decent means of livelihood.

According to Marcos, a tobacco farmer in I locos Norte and I locos Sur has an average of tobacco farm of about 7 hectares, which is higher than in La Union and other provinces such as Pangasinan and those in the Cagayan Valley.

At present, he said there are about 18,000 farmers engaged in tobacco farming in the Ilocos region who will be severely affected by the Drilon measure.

Marcos said he would propose specific amendments to Drilon’s recommendation.

“The P20 billion additional revenue could be feasible so that there will be no chaos and it will not destroy the industry,” he added.

Senator Pia Cayetano, meanwhile, said she preferred the sin tax version of Senator Miriam Defensor-Santiago which is similar to the Department of Finance version. Both target a P60 billion revenue from tobacco and alcohol products.

With a higher projection, Cayetano said this would mean higher price of cigarette as compared to Drilon’s version.

She added that this would make cigarette unreachable to the smokers particularly the youth who only depend on allowances from their parents.

Also present during the hearing were Internal Revenues Secretary Kim Henares, Health Secretary Enrique Ona, Undersecretary Teodoro Herbosa and Philhealth Chief Executive Officer Dr. Eduardo Banzon.