PMFTC, Inc. said it would invest P10 billion into agriculture and outsourcing development in the Philippines.
“In 2022 and 2021, we have pledged to invest P10 billion into creating about 1,000 jobs in the economy, on top of what we pay in excise taxes,” PMFTC President Denis Gorkun told ABS-CBN News Channel on Thursday.
“This will go directly to supporting agriculture improvements. We invest in the BPO (business process outsourcing) sector as well as giving direct help to small and medium enterprises here in the Philippines.”
The Philippine affiliate of Philip Morris International has not yet responded to a request for details on the investments.
Excise taxes on cigarettes this year went up by P5 to P55 per pack compared to 2021.
President Rodrigo R. Duterte in 2019 signed Republic Act No. 11346, which gradually raises cigarette excise tax to P60 per pack by 2023, and then by 5% every year thereafter.
Smuggling and illegal manufacturing of cigarettes have been increasing as excise taxes rise.
Mr. Gorkun said there should be a balance between increasing the government’s revenue stream and stopping illicit cigarette trade.
“The key is, in 2024 — when this excise tax law-prescribed increases that are there come to an end — of course is to craft a new road map with gradual, well balanced tax increases that provide a predictable revenue stream yet avoid some of the bigger pitfalls of increasing smuggled goods.”
He said the pandemic-related lockdowns and job losses affected industry sales as consumers flock to cheaper products.
“The illicit sector, of course, is benefiting from that because those products don’t pay tax. That’s why they are significantly cheaper.”
The Department of Finance has said that it estimates illicit cigarettes account for up to 10% of the market, quoting industry figures.
Finance Secretary Carlos G. Dominguez III said most illicit cigarette sellers are caught by the Bureau of Customs and the Bureau of Internal Revenue, reducing the number of illicit cigarettes sold in the country.
Excise tax collections on cigarettes rose 31% to P83 billion as of July in 2021 as tax rates increase and sales figures recovered.
PMFTC contributed to half of the total, or P42.04 billion in excise tax payments in the seven-month period. — Jenina P. Ibañez
