‘Why allow Philip Morris to monopolize Philippines?’

MANILA, Philippines – Finance Secretary Cesar V. Purisima said he has met with representatives of multinational firm Philip Morris as part of the consultations on the proposed bill in Congress to simplify the 4-tiered excise tax structure on sin products.

The Aquino government’s de facto head of the economic team in the Cabinet stressed, however, that the sin tax reforms are important and should be passed in 2012 to boost national revenues and contribute to health-related costs.

“It is natural for Philip Morris to fight change because you want to keep your monopolistic position. But in this environment, why should we, as a country, allow a monopoly?” he told reporters at the sidelines of the Philippine Economic Briefing on Tuesday, March 6.

Philip Morris and Lucio Tan-led Fortune Tobacco Corp. have entered into a joint venture in 2010. Their cigarette brands, which range from low-end to pricey ones, account for over 90% of cigarettes sold in the Philippines.

Sin taxes usually result in increase in cigarette price to make the product less affordable. At its current structure, the sin tax law favors Fortune Tobacco brands, which are local, and slaps higher taxes on others’ brands.

Before the Philip Morris-Fortune Tobacco venture, the Switzerland-headquartered Philip Morris was against the 4-tiered or complicated tax structure being legislated several years ago. But after the joint venture with the industry leader, Fortune Tobacco, Philip Morris flip-flopped, observed a think tank on March 1.

Purisima also addressed the positions raised by cigarette manufacturers against sin taxes, including smuggling, employment issues, and more. – Rappler.com