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Congress urged to pass ‘sin tax’ bill

Posted on: June 22, 2009

Congress urged to pass ‘sin tax’ bill

By Anna Valmero
INQUIRER.net
First Posted 16:42:00 06/22/2009

Filed Under: State Budget & Taxes, Legislation

MANILA, Philippines—A farmers’ group in Ilocos region has urged Congress to pass a pending bill raising tobacco excise tax.

At the same time, the Solidarity of Peasants Against Exploitation (STOP-Exploitation) is lobbying for the proceeds in excise taxes collected in tobacco-producing provinces to go directly to the farmers.

STOP-Exploitation chairman Avelino Dacanay said llawmakers from Northern Luzon should stop blocking the so-called sin tax bill that aims to raise tobacco taxes.

“If there is anyone that would strongly support the bill, it should be our congressmen. I really could not understand why they are opposing a measure that aims to help poor farmers like us,” Dacanay said.

Dacanay said based on Republic Act 7171, about 15 percent of excise taxes on locally manufactured Virginia-type cigarettes should be allocated to provinces producing Virginia tobacco, the “most in-demand and most grown tobacco variety” worldwide used in manufacturing cigarettes.

Under the current implementation, the excise tax allocation is given to local government units and spent in projects such as farm-to-market roads and solar dryer equipment.

But Dacanay said that don’t “directly help tobacco farmers to cut huge costs in farm production, especially in buying fertilizer and pesticides.”

“Tobacco production is cost and labor intensive—even our young sons offer production labor. Alongside the approval of the [sin tax] bill, we are clamoring for the allocation fund to go directly to farmers or farmer groups so we can allocate it based on needs such as cooperative credit or grant-to-loan funding with minimum interest for small farmers to help offset high production costs,” said Dacanay.

Currently, only those who can manufacture at least one million kilos of tobacco leaves can get direct financial grant from the allocation of RA 7171, he added.

Dacanay added the sale price of tobacco leaves at P90 to P120 per kilo for premium or Class AA leaves does not ensure that farmers can earn from their produce.

A hectare of tobacco plantation–that yields 1,800 to 2,000 kilos of tobacco leaves–requires over P77,000 for production costs only.

Not all produce are sold at premium prices, with most considered “rejects” or “low quality leaves” that traders buy at a low pricet, he said.

Dacanay also belied the claim of traders that another adjustment in the current taxation scheme will jeopardize the livelihood of tobacco farmers.

“Only the tobacco companies would likely be hurt by the increase in tobacco taxes because of possible decrease in consumption of cigarettes. Tobacco farmers’ produce will continue to be needed–local tobacco is still cheaper than those imported and we can join the export market because of decreasing tobacco production in other countries,” said Dacanay.

Dacanay theorized that the opposition to the new tax scheme is mainly due to the lobbying of the local and international tobacco companies in Congress.

The proposal of the Department of Finance to reform the taxation scheme in tobacco and liquor and increase government revenues through these “sin products” is getting stiff opposition from the legislators in Northern Luzon who have successfully stalled the bill’s passage.

STOP-Exploitation has 10,000 farmer members in La Union, Ilocos Sur, Ilocos Norte and Abra.

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