BAT says sin tax bill promotes level playing field

Rappler.com
A cigarette company that has been eased out from the Philippine market due to the current sin tax system lauded the reform bill increasing the levies on tobacco and liquor as a step towards a more level playing field

ITCHING TO FIGHT. British American Tobacco Philippines General Manager James Lafferty in a recent press briefing. Photo by Katherine Visconti

MANILA, Philippines (UPDATED) – A cigarette company that has been eased out from the Philippine market due to the current sin tax system lauded the reform bill increasing the levies on tobacco and liquor as a step towards a more level playing field.

A day after the House of Representatives passed House Bil (HB) 5727, which rationalizes the 4-tiered sin tax structure, British American Tobacco (BAT) general manager James Lafferty said the bill’s proposed two-tiered system benefits new players like them.

“The current system has been in place now for 16 years. It has benefited only a few industry players led by a monopoly but has not served the interests of the Philippine government, the general public, and new players like us who wished to invest and create new jobs. And HB 5727 seeks to finally end that,” Lafferty said in a statement Thursday, June 7.

Previously, Lafferty considered HB 5727 as “the best compromise” for a level playing field.

“The proposed two-tier system on tobacco is the best compromise under the circumstances. It will deliver the government’s revenue goals and pave the way for a level playing field in our industry,” he said in May, when the bill made it through first pass at the Ways and Means committee at the House.

The original version of HB 5727 proposed a single tax system that did not discriminate against foreign brands and new entrants, but its proponents watered it down to a two-tiered system to break the impasse and move it along.

It has been over a decade since a reform bill on sin taxes made it through the House plenary.

Important market

After nearly a decade of hiatus, BAT returned to the Philippines early this 2012.

It pulled out of the market after the Philippine government did not rule in its favor over a tax issue that classified its foreign brand, Pall Mall, as a premium brand under the prevailing multi-tiered sin tax system. The current tax system favors local and low-priced brands, and priced BAT’s products as too expensive even for a few who can afford it.

The local cigarette industry is dominated by the joint venture of multinational Philip Morris and local market leader Fortune Tobacco Manufacturing Corp. Together, they account for around 94% of total cigarette sales.

BAT, which competes against Philip Morris in other markets including in Indonesia, said the Philippines is an important market for the company.

Lafferty had previously said that BAT will invest $200 million in the Philippines over the next 5 years if the sin tax structure is pushed. – Rappler.com