Regressive sin tax bill threatens livelihood of farmers; favors imports over local goods – Colmenares

BAYAN MUNA Rep. Neri Colmenares described yesterday the sin tax bill now pending in Congress as a “regressive, anti-Filipino” form of taxation that favors imports over local brands and jeopardizes the job security of small farmers and workers in the tobacco and alcohol industries.

He said the Senate version of the bill is no better than the House measure because it places the tax burden squarely on the shoulders of the small stakeholders in the tobacco and alcohol industries, while favoring big firms which can afford to shell out hefty tax payments.

“Like House Bill 5727, the Senate measure—SB 3299—ignores the plight of farmers and workers. For instance, instead of placing the tax load on makers of expensive, imported cigarettes who can well afford to pay high taxes, the bill punishes our farmers and workers,” Colmenares said. “This is a regressive, anti-worker, anti-farmer and anti-Filipino bill.

SB 3299 imposes excise tax increases of 341 percent on low-priced cigarettes on the first year, which will increase by 451 percent on the second year; 561 percent on the third year; 672 percent on the fourth year; and 855 percent on the fifth year when a unitary tax rate of P26 per pack is implemented for all cigarette brands.

“These tax hikes are too much for our farmers and small local manufacturers to bear. They are the ones being punished even though they are the ones who are investing here in the country, and toiling hard to sustain the tobacco industry as a stable, steady source of revenues for the government,” Colmenares noted.

He noted that small players in the tobacco industry have already warned that they would have no choice but to lay off workers and eventually shut down their operations even before the unitary tax scheme is imposed because they cannot survive under the unfair tax regime prescribed under SB 3299.

Colmenares asked how the government expects small players to survive in a regime where they have to shell out tax payments that are higher than their production costs and profits combined. “This is definitely confiscatory and I fail to see how the government cannot understand this,” he remarked.

Tobacco farmers, Colmenares noted, would be next in line to absorb the negative impact of the tax hike because their produce are bought by makers of low-priced brands.

He said tobacco farmers should not expect too much from the assistance package pledged by Sen. Franklin Drilon for them because they themselves are aware that the aid that was supposed to go to their sector under previous tobacco excise tax laws either did not reach them or were inadequate.

Republic Act 7171, for instance, allocates funds for the development of the tobacco industry and assistance to tobacco growers. “But the government has no coherent and comprehensive program providing for support services, subsidy, and assistance to tobacco farmers. The funds are just released to the provinces, but there is no assurance that all of the money will benefit the farmers,” Colmenares added.

Colmenares also expressed concern that the tax measure, which is now being discussed at the bicameral conference committee, would lead to rampant smuggling as it would obliterate low-priced brands.

He noted that countries that have imposed abrupt and sharp tax increases on the tobacco industry such as Singapore, Canada, Malaysia and Ireland, to name a few, had to battle smugglers who flooded their markets with cheap, untaxed illicit cigarettes.

“These countries have efficient, well-manned customs bureaus yet they were immensely challenged to arrest cigarette smuggling. What can we expect from our own customs bureau, which is not only understaffed but prone to corruption?” Colmenares said.

He warned that the sin tax bill would encourage smugglers to bring in contraband cigarettes into the country to fill the needs of low-income smokers looking for cheaper alternatives to their preferred brands that would be priced beyond their reach if the bill is passed.

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