‘Hike in sin taxes will lead to smuggling’

From: ABS-CBNNews.com (Philippines)

MANILA, Philippines – Federation of Philippine Industries (FPI) president Jesus Aranza on Tuesday warned the government that increasing the excise taxes for tobacco may result to proliferation of smuggling that will eventually lead to the demise of local industries.

Aranza attended Tuesday’s congressional hearing of the committee on ways and means as a resource person on the economic impact of the proposed House Bill 5727.

He said smuggling incidence in the country will rise should Congress pass the bill that seeks to impose steep excise tax rates on alcohol and tobacco products. “If you put high tax on cigarette, or on anything, it creates an atmosphere, a haven of smuggled goods,” Aranza said.

The FPI president cited tire companies and textiles as examples of industries that have died due to higher taxes, and resulted in the entry of smuggled products in the country.

“Ang tire companies, dati 6 ang may-ari ngayon isa na lang. Ang mga textile companies nawala rin dahil sa mga ukay-ukay,” he said.

Aranza said it will create a ripple effect on the local industries that will be hit hard by the proposed increased in excise tax. At present, the taxes range from P2.72 to P11.72 per pack for locally manufactured tobacco depending on the category quality of the product.

In the event the bill turns into law, the excise tax will reach P30 per pack. “Too much, excessive taxes will not lessen consumption. Kung palitan lang nila yan ng mura na galling sa mga smuggled, eh di pinayaman pa nila yung ibang bansa,” he said.

Aranza said the government should be more concerned with curbing smuggling, since the country has been losing as much as P200 billion annually due to smuggling of all kinds of products.

He also noted the passage of House Bill 5727 will result into loss of jobs, revenues, and livelihood of around 7.7 million Filipinos who are dependent on the local manufacturing of alcohol and tobacco.
Meanwhile, Health Secretary Enrique Ona said smoking has been a major cause of non-communicable diseases in the country.

Ona said studies showed that those who are affected by these diseases are the very poor sector of society, who are mostly engaged in smomking.

To reduce the number of those hit by non-communicable diseases, Ona said they have to curtail smoking by simply making it less accessible by increasing the cost of tobacco and alcohol.

“Curtailment of smoking should start among the young men. Study shows that the very poor are mostly affected,” he said.

The government understands the economic impact of increased taxes and admitted that a “good number” of farmers will be affected. But Ona said the government has an “assistance plan” for the farmers in the process of transition to other products.


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