LEGISLATORS from tobacco-growing regions have asked the Senate to reconsider bills seeking to further increase tobacco taxes, citing the danger to farm livelihoods.
In a letter to Senate President Vicente C. Sotto III dated Oct. 8, the Northern Luzon Alliance (NLA) said that tobacco is currently heavily taxed, to the detriment of farmers.
“We are saddened by the proposals to raise the excise tax rates by more than 100%. Such a move will certainly affect our constituent-tobacco farmers who are still struggling from the loss of income as a consequence of RA No. 10351 or the Excise Tax Reform law of 2012. And as we all know, the tobacco excise tax rates were further increased under the newly-enacted RA No. 10963 or the TRAIN (Tax Reform for Acceleration and Inclusion) law,” the alliance said.
They cited National Tobacco Administration data showing declining tobacco production in terms of sticks and tobacco leaf volume,the decline in registered tobacco farmers, and the decline in land area planted to tobacco.
“It is our shared responsibility as members of the NLA to protect the interests of our constituents who depend on the tobacco industry,” the letter read.
Under the TRAIN law, tobacco excise taxes were set at P35 per pack in July from P32.50 in January and P30 in 2016. The taxes will gradually increase to P40 per pack until January 2022.
As part of its comprehensive tax reform program, the Department of Finance (DoF) said that it will support Senator Emmanuel D. Pacquiao’s Senate Bill No. 1599 that seeks to increase the excise tax rate to P60 per pack of cigarettes.
Senator Joseph Victor G. Ejercito also filed a similar measure last year under Senate Bill 1605 that raises the excise tax to P90 per pack.
“It is therefore, unfortunate that tobacco is always targeted despite being a big source of revenue for the government. Hence, we ask: why heavily tax tobacco again? Why should Filipinos in this sector suffer again? On behalf of the more than 9 million people living in Northern Luzon, we request your good office to seriously consider the plight of our farmers and other constituents in the tobacco industry. Our fellow Filipinos in Northern Luzon should not be marginalized through successive and unreasonable tax increases,” the group said.
Think tank Action for Economic Reforms (AER) said the bills raising excise tax will help affected farmers improve their competitiveness or shift to higher-value crops.
They noted that funds earmarked for such purposes more than doubled to P10.7 billion in 2015 from P4 billion in 2013.
“These should fund government support programs to tobacco farmers to improve production, and provide for infrastructure, training and market support to develop farmers’ income and livelihood. The opposition of legislators from tobacco-growing areas is thus, unfounded, considering the incremental support that they will get if the taxes are increased,” said AER Fiscal Policy Coordinator Jo-Ann Diosana in an e-mail when sought for comment.
According to the DoF, tobacco excise taxes generated P78.95 billion in government revenue in the first half, up 53.5% from a year earlier and far surpassing the P51.42 billion target.
“The legislators from the so-called Northern Alliance are at it again. They are recycling old arguments,” Ms. Diosana said.
“Congress should also look into the said earmarked funds and evaluate how these are helping the farmers and their families as intended by the law,” said Ms. Diosana. — Elijah Joseph C. Tubayan