Tobacco farmers seek tax relief

by Louise Maureen Simeon (The Philippine Star), Feb 3, 2019

MANILA, Philippines — Local tobacco farmers are urging the government to hold back on further increasing excise taxes on alcohol and cigarettes to allow them to stay afloat.

More than 20 tobacco farmer groups, led by PhilTobacco Growers Association (PTGA), have asked the Senate to help them with their plight.

“It has been tough times for us since everyone is aware that demand for tobacco has been going down due to several excise tax hikes. Our very livelihood is at stake,” PTGA president Saturnino Distor said.

Distor said taxes on tobacco products had increased seven times in the last five years. This is the most for any industry, he said, adding that farmers could not take anymore increases.

“We are struggling and a lot of us already lost their livelihood,” he said.

From a tax of P2.70 per pack of the cheapest cigarette in 2012, it is now P35 a pack with yearly increases of four percent.

Data showed that tobacco production volume is down to 48 million kilograms in 2017 from 68 million kilos in 2013.

The National Federation of Tobacco Growers Association and Cooperative (NAFTAC) said tobacco farmers are always the victims whenever the government wants funds to support their programs.

“The government has been throwing punches at tobacco farmers and never gave us time to breathe and recover, including loss of jobs and livelihood among our ranks,” NAFTAC president Bernard Vicente said.

Farmers from tobacco-producing provinces of Ilocos Norte, Ilocos Sur, Pangasinan, Isabela, Cagayan, Misamis Oriental, Abra and La Union are questioning the government’s direction for the industry, which provided P126 billion in revenues.

“Since the successive excise tax hikes, cigarette consumption went down to 30 billion sticks and 20 million kilos of farmers’ tobacco harvest were not purchased,” the farmers said.

President Duterte earlier agreed to certify as urgent the proposal of the departments of finance and health to jack up sin taxes.

The House version of the sin tax reform bill, which the lower house passed on third and final reading before the Christmas break, seeks to impose an additional tax of P2.50 for every pack of cigarettes.

At the Senate, Sen. Manny Pacquiao proposed to increase the excise tax on cigarettes to P60 per pack while Sen. JV Ejercito proposed to raise the cigarette excise tax to P90 per pack.

The DOF earlier said it was eyeing to raise an additional P61.3 billion in revenues from the second round of increased “sin” taxes proposed under its comprehensive tax reform program. The figure is expected to increase further to P77.6 billion by 2021.

Local government officials from tobacco producing provinces in the north said the almost three million Filipinos dependent on the industry are suffering from the adverse impact of higher taxes.

“From 2013, tobacco crop production declined by more than 20 million kilos or roughly 40 percent of the annual yield. This represents a significant drop in the household income of tobacco farmers,” the governors said.

According to the Intellectual Property Office of the Philippines, cheap fake cigarettes were the most smuggled goods last year. About P20 billion worth of cigarettes were seized in 2018.