Tobacco farmers have appealed to the Senate to take out a provision in the House-approved bill revising excise taxes on the cigar industry, providing steep increases on those local products as it is seen to slash, if not wipe out, a considerable amount of their income.
Needless to say, the Philippine Tobacco Growers Association (PTGA) yesterday said, the measure posed a threat to the livelihood of hundreds of thousands of factory workers dependent on the industry.
The group was referring to what they claimed as an “anti-farmer, anti-worker” provision approved by the House of Representatives in their version of bill reforming excise taxes on tobacco and alcoholic beverages, imposing as much as a 700-percent to a 100-percent increase on low-priced cigarette brands.
“This is a big dent on our income. How can we recoup  our production and operational costs in planting tobacco if we cannot sell all our produce?,” asked Saturnino Distor, PTGA president, pointing out that their harvest was bought by major manufacturers as well as small cigarette producers.
“We appeal to the Senate to correct the grossly unfair and inequitable provisions in the House tax bill, which threatens the survival not only of tobacco farmers, but of the millions of others dependent on the tobacco industry,” Distor added.
A very high tax will likely effect high retail prices of locally produced cigarettes, leaving the farmers with no market to sell a significant volume of their annual production, he claimed.
Distor doubted the government’s estimate that new entrants in the tobacco industry would buy three million kilos of local tobacco leaf, noting that this maked up a measly 2.4 percent of total production of almost 80 million kilos last year.
“We cannot understand the government’s logic of taking away the only source of our income, just to accommodate a new investor who buys only a minimal percentage of our produce,” he said.
Tobacco farmers and industry workers also aired an appeal to Sen. Ralph Recto, chairman of the Senate ways and means committee, saying workers employed by small cigarette manufacturers such as La Suerte, Mighty Corp. and the Associated Anglo-American Tobacco Corp. would be the first to be directly hit by the House tax proposal.
“Thousands of workers of small cigarette manufacturers will be the first to join the unemployment line if this bill is passed because small tobacco firms would be forced to close their businesses as they would be unable to compete with the influx of imported brands that pay only minimal taxes,” said Hilario Punzalan, president of the National Federation of Labor Unions (NAFLU).
He voiced concerns that the legal cigarette market will be taken over by the black market of smuggled and counterfeit cigarettes, which cost much lower than the low-priced brands of the small manufacturers.
Farmers’ and workers’ groups, in separate statements, also voiced out strong opposition to the excise tax bill approved by the House, which taxes low-priced cigarettes 708 percent; mid-priced brands 297 percent and high-priced brands 150 percent by 2014. Cigarettes  in the low-priced tier currently taxed P2.72 per pack will pay P12 in 2013 and P22 in 2014. Mid-priced brands now paying P7.56 in tax and high-priced brands paying P12 will both be taxed P28.30 in 2013 and P30 in 2014 under the House version. On the other hand, premium imported brands will enjoy a tax holiday on the first year of the bill’s implementation and a measly 6 percent tax increase in 2014.
To compensate for the excessively high taxes, small cigarette manufacturers would have to price their brands at rates equal to those of imported premium brands that only the rich can afford, the farmers added.