Farmers fight back

By Mary Ann LL. Reyes (The Philippine Star), Dec 10, 2017

Sen. Manny Pacquiao is about to face what could probably be one of his toughest fights.

Just recently, Pacquiao filed a bill seeking higher tax on tobacco, not only to collect more revenues but to protect the people’s health.

Senate Bill 1599, which seeks to amend Republic Act 10351 or the Sin Tax Reform Law, aims to increase the excise tax on tobacco products to P60 from P30 per pack. There will also be an annual increase of nine percent from the current four percent.

He explained that the increase in cigarette excise tax will reduce smoking prevalence to 19.8 percent by 2020 and will generate revenue to contribute to the government’s higher tax target.

Pacquiao had asked Sen. Sonny Angara, chair of Senate committee on ways and means, to include the bill in the Tax Reform for Acceleration and Inclusion or TRAIN, another proposed bill that is expected to generate as much as P130 billion in fresh revenues with higher taxes imposed on fuel, coal and sugar-sweetened beverages, among others.

The boxing champ, however, seemed to have forgotten the fact that the tobacco industry in itself is a huge source of revenues for the government and a sector that is the lifeblood of millions of Filipinos.

In a letter to Angara, the Philippine Tobacco Growers Association, which represents 50,000 tobacco farmers nationwide, said that this proposed 100 percent increase in tobacco excise taxes will have a devastating impact on tobacco farmers who are still struggling from the loss of income as a consequence of Republic Act 10351 or the Sin Tax Law of 2013 which resulted in a 340 percent increase in excise taxes.

The group said that its members have barely gotten back on their feet from the blow dealt by RA 10351, and now, Pacquiao wants to deliver the knock-out punch. The said law provided for an automatic four percent increase annually, which has resulted in tobacco production falling from 68 million kilograms in 2013 to 52 million kilos in 2015 based on data from the National Tobacco Administration, they lamented.

They emphasized that tobacco is being targeted again, despite the fact that tobacco excise taxes contributed around P100 billion in 2015, up from P32 billion in 2012 and that the tobacco sector is giving more than its fair share of the tax revenues for the government.

In December of last year, the tobacco farmers opposed a similar move in the Lower House to introduce a big increase in tobacco tax through House Bill 4144, citing among others the lack of proper consultation with stakeholders such as farmers as it was swiftly approved by Congress. And now, health groups are again calling for a steeper increase in tobacco taxes without consultation.

PTGA president Saturnino Distor said that they agree with Angara’s position that the implementation of sin taxes under RA 10351 must be thoroughly studied first before amending the law again and introducing drastic increases.

In another letter to Angara, the Katipunang Manggagawang Pilipino or the Trade Union Congress of the Philippines expressed its strong opposition to the proposed inclusion of an increase in the tobacco tax in the first package of TRAIN.

TUCP president Ruben Torres noted that in 2015 alone, data from NTA showed that the number of workers in the tobacco industry was reduced by 9,232 farmers, and area planted to tobacco, from 38,264 hectares in 2014 to 32,761 in 2015.

A Philippine Statistics Authority (PSA) survey also showed country’s unemployment rate up from 5.8 percent in January 2016 to 6.6 percent in January 2017 or 2.8 million Filipinos unemployed. Among the regions, Ilocos Region, a tobacco farming region, registered the highest unemployment rate at 8.7 percent.

The group added that the the tobacco manufacturing sub-sector has already lost almost one thousand full-time positions since the Six Tax Law of 2012 (RA 10351) was enacted. British American Tobacco also announced in November its intention to completely close its operations in the Philippines with the loss of several hundred jobs.

He also noted that while RA 10351 provided for financial support for displaced farm workers only from 2014 to 2017, Pacquiao’s proposal did not provide for an extension of this period, blatantly disregarding the welfare of farm workers who would be displaced.

Meanwhile, the Federation of Free Farmers wants to know how the tobacco funds are being used. The law provides that 15 percent of the incremental revenue collected from tobacco excise tax shall be allocated and divided among the provinces producing burley and native tobacco in accordance with their tobacco leaf production. The fund shall be exclusively used for programs promoting economically viable alternatives for tobacco farmers and workers.

FFF national president Ruben Presilda in his letter to Angara that a full assessment of RA 10351 must be done first before amending the tax system again, especially since the yearly increases in tobacco taxes have resulted in lower demand for the tobacco crop.

I agree that a thorough review of the impact of RA 10351 must first be made. What is Pacquiao’s basis for the 100 percent increase? Is it because it is a nice, round figure? If we want to kill industries that are bad for Filipinos, then why not close down casinos? We are tolerating legitimate gambling or that which is sanctioned by Pagcor because it funds social projects. Gambling is evil, period. White rice and bread are bad for blood sugar. Eating pork and beef is linked to high bad cholesterol levels. Many snack foods do not provide nutrients at all and in fact are high on sodium. So why not raise taxes on their sale if we are to follow Pacquiao’s argument of imposing high taxes on products that are bad for the health. Of course, these are stupid ideas, but our government seems not to care.

My point is that this government can do better in terms of looking for ways to generate additional revenues.

For comments, e-mail at mareyes@philstarmedia.com.