House committee approves increase in tobacco excise taxes

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Metro Manila (CNN Philippines, November 27) — The House Ways and Means Committee approved Tuesday a measure raising excise taxes on tobacco starting next year.

The bill, which remains unnumbered, is expected to be sponsored in plenary soon. Under the measure, the tax on each pack of cigarettes will go up from the current ₱32.50 to ₱37.50 in July 2019.

Excise tax on cigarette packs would then be raised by ₱2.50 each year starting 2020 until 2022. After that, it will be go up by four percent annually.

A nongovernmental policy group also on Tuesday said raising excise taxes on tobacco products by as much as ₱60 will not have a negative impact on tobacco farmers' livelihood.

Jo-ann Diosana, a senior economist of the Action for Economic Reforms, said the local tobacco farming industry will not feel the brunt of higher excise taxes because the bulk of its production are exported to other countries.

"Excise taxes do not lead to a reduction in local tobacco production because local tobacco production is not dependent on local cigarette consumption. We're not really dependent on just domestic consumption of cigarettes. We're also an exporter," she said.

Citing data from the Philippine Statistics Authority, Diosana said the volume of tobacco production grew from the time the sin tax law was passed in 2012 up to the present.

Between 2008 to 2012, local tobacco production was recorded at 40 thousand metric tons. But from 2013 to 2017 — when the sin tax law was already being implemented — local tobacco production reached close to 56 thousand metric tons.