Group to Philip Morris: You flip-flopped!
A non-government group says Philip Morris, which is opposing sin tax reforms now, lobbied for a similar tax structure in 2003

MANILA, Philippines – The Action for Economic Reforms (AER) snapped at the local unit of multinational firm Philip Morris for allegedly flip-flopping on its position regarding sin taxes.

AER, a non-government group that supports moves to raise excise taxes on alcohol and cigarettes, said Philip Morris Philippines Manufacturing Inc. (PMFTC) previously lobbied for a single-tier tax system but is now opposing current efforts to legislate it.

AER senior economist Jo-Ann Latuja cited a 2003 letter of Philip Morris to then President Gloria Macapagal-Arroyo expressing support to having a unitary tax system.

Philip Morris was then a far second to Lucio Tan-led Fortune Tobacco Corp., then the undisputed market leader, thanks to the excise tax system that was designed to favor the local brands of Fortune Tobacco.

In 2010, Philip Morris and Fortune Tobacco entered into a joint venture–PMFTC, which now corners 94% of the Philippine tobacco market.

Against single-tier tax

In its 3-page letter dated February 5, 2003, Philip Morris said a single-tier system “should result in an increase excise tax collection” and “promote a level playing field for all manufacturers.”

“In brief, our proposal is that the current 4-tier specific system should be changed to a single-tier specific system over a period of 3 years,” the letter, signed by former General Manager George Farah, said.

“This letter confirms our doubts that Philip Morris, which was once an advocate of excise tax reform, is protecting no one but its own personal causes for opposing the similar reform it had fought for in the past,” Latuja said.

On the other side

Proposed reforms on the current 4-tier sin tax structure have been pending in Congress.

Cavite Rep. Joseph Abaya is sponsoring House Bill 5727, a Finance-backed measure that calls for the adoption of a unitary structure.

This time, the cigarette giant is opposing the bill.

On the other side are the government and British American Tobacco.

BAT, the multinational firm that makes the Lucky Strike brand, had retreated from the Philippine market years ago over a tax issue.  

The Aquino administration is pushing for the passage of the Abaya measure that is expected to yield additional revenues of roughly P60 billion a year from tobacco and alcohol products. –

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