Philip Morris Fortune Tobacco Corp. (PMFTC), which Finance Secretary Cesar Purisima says controls 90 percent of the tobacco products market, renewed on Tuesday its opposition to higher sin taxes by recalling the campaign promise of President Benigno Aquino III that he would not impose new taxes during his term. “PMFTC and the tobacco industry and all the other tobacco companies have been very clear in their position on excise (taxes) and that is obviously why we favor continuing moderate increases similar to the law which was executed in 2004,” PMFTC president Chris Nelson said in a briefing with reporters Tuesday.
The 2004 sin tax law gradually raised excise tax rates on tobacco and alcohol products every two years starting in 2007, with the last adjustment happening this year.
Nelson also warned that any new sin tax would result in the resurgence of smuggling of tobacco products. “There will be an increase in illicit trading,” he said.
In a statement Tuesday, Purisima said international credit rating agencies “are very keen on our push for reforms in… sin taxes.”
The Finance chief also cited World Bank estimates that the country “could gain as much as 1.3 percent of GDP in additional revenues from reforms in… sin taxes like uniform tax rates and indexation.”
He added that the resulting improvement in the tax base “would definitely boost our drive towards investment grade."
Different versions of sin tax legislation are pending in Congress. The Finance Department supports a version that could raise P60 billion annually from cigarette and liquor taxes. — ELR/VS, GMA News
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