Price floor for cigarettes proposed

“Business World” Posted on October 05, 2014 10:53:00 PM

A LAWMAKER seeks to impose a minimum price on cigarettes sold in the country in a bid to further curb smoking among Filipinos and increase government revenues.
Last month, Romblon Rep. Eleandro Jesus F. Madrona filed House Bill (HB) 5013, which requires retailers to sell all local and imported cigarettes for at least P38 per pack starting January 2015 should the bill be enacted anytime soon.

By 2016, the minimum price would be P44 per pack, and, by 2017, P51 per pack. The base price will then increase by at least 4% for each succeeding year, as stated in the bill.

“Setting a minimum cigarette price per pack of cigarettes will decisively deny youth access to cheap, affordable cigarettes and support the beneficial health impact of the excise tax reform law,” the measure reads.

At present, the cheapest cigarette packs cost around P30.

The proposed measure comes on top of the Sin Tax law approved in 2012, which excise taxes on tobacco and alcohol products, and the Graphic Health Warning Law approved in July, which requires all cigarette manufacturers to print visual diagrams and reminders of the health risks for smoking on all cigarette packs.

Mr. Madrona said the “price discipline” to be imposed would complement these existing laws to altogether discourage youth smoking.

HB 5013 also aims to foil tax evasion among industry players, Mr. Madrona said, as the proposed minimum price requirement would stop companies from selling their products at lower prices to increase market share.

Latest data from the Bureau of Internal Revenue showed that excise tax collections from tobacco rose by 44.44% to P28.18 billion in the first half compared to the P19.51 billion shored up in the same period last year, beating the government’s P14.46-billion goal for the period.

The National Tobacco Administration deferred comment on the proposal, citing the need for further studies.

BusinessWorld also tried to reach tobacco companies on the matter, but they could not provide their comments as of this writing.

Stiff penalties await cigarette sellers for non-compliance with the proposed minimum price, ranging from a fine of P50,000 to P2 million and six months to five years in prison.

The measure is pending at the House Committee on Trade and Industry. A counterpart bill is also pending at the Senate Committee on Ways and Means. — Melissa Luz T. Lopez