Ilocos leaders, tobacco farmers oppose uniform tax on cigarets By Teddy P. Molina The Philippine STAR  VIGAN CITY--- Ilocos Sur Governor Deogracias Victor "DV" Savellano has joined forces with the National Tobacco Admnistration (NTA) and tobacco farmers in opposing the uniform tax rate system proposed by the Department of Finance (DOF) for all classes of cigarets ranging from pemium to low-class brands. Saying the tax scheme will wipe out the local tobacco industry, Savellano, NTA Admnistrator Carlitos Encarnacion and Carlos Cachola, president of the Philippine Association of Tobacco-Based Cooperatives (PATCO)  announced their readiness to lobby in Congress against it. Earlier, Deputy Speaker Eric Singson of the House of Representatives has raised objection to the DOF plan saying the northern bloc in the House which he heads will "shoot down" any legislation mandating a uniform cigaret tax rate once submitted for deliberation in Congress. News reports had earlier cited DOF as pushing for legislation favoring a single rate tax scheme that would amend the present four-tier tax rate system for cigarets.The present rates as provided in the "sin" tax law enacted in 2005 range from P25 to P2.50 a pack. The tax range subjects the imported and premium brands to higher rates while the low class cigarets pay lowest. The proposed single tax system would have all classes of cigarets charged an excise tax of P14 per pack. Under DoF's estimates backed by the International Monetary Fund (IMF), the government will raise P31.8 billion to P33.8 billion in the first year of implementation once the sin tax law covering cigarets is amended into a one-tier rate scheme. Savellano and Encarnacion expressed support to Singson's and the northern bloc's stance with the Ilocos Sur governor saying that he will ask his fellow governors to support their opposition to the planned DOF legislation.  Ilocos Sur is the chief producer of virginia tobacco in the country.   "I will ask all other governors in the country to support us by asking their congressmen to reject the DOF cigaret tax plan once it reaches Congress," Savellano who is vice president for Luzon of the League of Governors said.   He and Encarnacion echoed Singson's stand that the farmers will run out of buyers of their low grade tobacco leaf harvests if the single tax rate system is adopted. They said that 60 percent of the leaf output of farmers are composed of low grade tobacco which are utilized by manufacturers of ordinary cigaret brands. The uniform tax scheme would allegedly drive ordinary cigaret makers out of business as their products will not be able to stand the sales competition.   "With the P14 tax imposition, makers of these ordinary brands that are being sold currently at P8 to P10 a pack will be compelled to raise their prices at a level close to those of premium brands," Savellano said.  "Who will buy them," he asked.  Encarnacion whose agency supervises tobacco farm production said that the negative effect of the DOF measure in tobacco farms would be "massive". He explained that each tobacco plant consists of top grade and low grade leaves with the low grade leaves classified as "C", "D", "E" and "R" dominating in number. The top grades (AA, A, and B) are procured by the manufacturers of premium cigarets while the low grade leaves go to  ordinary cigaret nakers, he said. "No tobacco farmer will ever venture into growing the crop if no one buys his low grade  yields because a huge chunk of his income comes from his sale of the C, D, E, and R leaves," he said. He said that under that situation, tobacco farming would be forced to stop.Local manufacturers of premium cigarets would be compelled to import their leaf materials fully from abroad and contribute to the draining of the country's dollar reserves, it was learned.         Singson who heads the Northern Luzon Alliance (NLA) composed of congressmen chided Finance department officials saying they should instead concentrate in the "efficient collection of taxes." "This is not the the time to impose new taxes when  the economy is at its lowest and our people are suffering from high prices," the deputy speaker said.

Northern bloc in congress oppose one tier tax for all cigaret brands NTA chief joins opposition to cigaret tax plan Tobacco industry is here to stay - Chavit

 

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