Sin tax ‘will not benefit tobacco farmers’

A LAWMAKER said tobacco farmers have yet to
take advantage of the tobacco excise tax collection as mandated by Republic Act 7171, supposedly aimed at developing the tobacco industry.

“The government has not provided a comprehensive program for the support services, subsidy and assistance to tobacco farmers. Tobacco farmers will not benefit from the increase of retail prices of cigarettes increase due to sin tax. The sin tax, like the value-added tax (VAT) and other regressive taxes, will not have a trickle-down effect on the public,” Bayan Muna Representative Neri Colmenares said.

The lawmaker said the tobacco tax hike will exacerbate the country’s current unemployment problem.

“It is everyone’s right to have gainful employment. With this tax measure, not only the tobacco industry will be affected but also the sectors and industries which depend on it,” he said.

“Is it reasonable to use the bill as platform for putting people out of work?” he asked.

Colmenares also feared that the high tax imposition on tobacco products would lead to an influx of illegal or smuggled cigarettes into the country, like what happened in other countries such as Singapore, Malaysia, and the United Kingdom.

According to studies, when the government increased tobacco excise tax by 135 percent, the volume of illegal cigarettes seized by Singapore Customs increased from eight million cigarettes in 2000 to 106 million in 2006 or a significant 1225-percent increase.

Malaysia also experienced the rampant smuggling from 2004 to 2009, where the illicit trade reached 38 percent, while United Kingdom recorded a revenue loss estimated at £45 billion (P70 billion) after imposing taxes three to seven percent higher than the inflation. (Teresa D. Ellera)