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Tobacco growers to get P6 billion windfall from sin tax reform bill

Written by Ilocos Sentinel posted on Saturday, December 15th, 2012

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LAOAG CITY – Contrary to tobacco farmers’ perception, the sin tax reform bill will provide additional P6 billion in tobacco excise tax funds to the four tobacco-growing provinces in Northern Luzon, Sen. Franklin Drilon, a proponent of Senate Bill 3249.

Speaking on Bombo Radio network news, Drilon dismissed fears that the sin tax bill will spell the death of the tobacco industry in the provinces of Ilocos Norte, Ilocos Sur, Pangasinan and La Union.

“Tobacco growers are assured of a 15 percent-share from tobacco tax collections which translates to P6 billion more to the industry. These funds can be used by farmers to expand their crop production like corn, garlic and rice,” he said.

Under R.A. 7171 or the tobacco excise tax, tobacco growers get a slice of P4 billion from the taxes generated.

“This means additional P10 billion funds to tobacco growers with the passage of the sin tax,” Drilon said.

Under Drilon’s proposal, the government expects to generate from P40 to P45 billion of tax collections from cigarettes and alcohol. Of the expected revenue collection, P25 billion will come from cigarettes and P15 billion from alcohol.

He said the sin tax bill is both a revenue and health measure because it seeks to reduce cigarette consumption among Filipinos.

Citing a study, Drilon said 17 million Filipinos are smoking more than 10 tobacco sticks a day causing 80,000 deaths every year.

Drilon noted that the Filipinos have easier access to cigarettes than their Asian counterparts because the Philippines has the cheapest cost of tobacco.

“This is the reason why our poorer citizens are most afflicted because they can easily afford to buy cigarettes,” he said.

Drilon said Philippine cigarettes will still remain the cheapest among Asian countries like Thailand, Indonesia, Singapore, Malaysia and Japan even if the government succeeds in increasing taxes.

He said once the bill is passed, 50 million Filipino families will be assured of health insurance under the Philhealth system noting that P23.5 billion from the tax collections will go to universal health care.

According to Drilon, tobacco growers will not feel the effects of reduced consumption of cigarette in the Philippines because only 15 percent of tobacco production is consumed locally while 85 percent are being sent abroad as export citing a report of the National Tobacco Administration. (Cristina Arzadon)

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