Northern bloc in congress oppose one tier tax for all cigaret brands By Teddy P. Molina The Philippine STAR  Saying it will trigger the doom of the tobacco industry and cause mass dislocation of farmers who are raising the crop, the northern bloc of congressmen expressed strong opposition to a move initiated by the Dept.of Finance (DOF) pushing for a single rate tax for all classes of cigarettes. "You can't do that. The local tobacco industry will go extinct and the farmers who depend on it will be dislocated," Deputy Speaker Eric Singson who is the president of the Northern Luzon Alliance said yesterday. Singson said that the unified tax scheme would place imported cigarets which are presently taxed P25 a pack to great advantage over their competing locally- manufactured premium brands. Local premium cigarets are taxed P10 a pack presently. Worstly affected, he added, are the low-class brands which are made of Class "C", "D", and "E" tobacco. These cigarets currently enjoy a P2.50 a pack tax. The premium cigarets use top grades AA, A, and B tobacco leaves, it was learned. The deputy speaker said that under the measure being pushed by the DOF, a flat rate of P14 a pack would be imposed on all cigaret products by whatever class or brand. The northern bloc's stance came following news reports on the proposed single tax rate being sought by the DOF with the backing of the International Monetray Fund (IMF). IMF estimated that the uniform tax plan will raise as high as P33.8 billion in additional cigaret tax revenues in the first year of implementation. Singson warned that given congressional fiat, the scheme will"kill" the livelihood of farmers in Northern Luzon who have been growing tobacco as their chief cash crop "since time immemorial". He explained that 60 percent of the farmers' tobacco production are of the lower grades classified as C, D, and E. These tobacco types, he said, are utilized by manufacturers for their low-class cigarette products.  He said that low-class and low-priced cigarets, when taxed with the same rate as premium brands, will end up having no patrons after their manufacturers are forced to jack up their products' prices. The increase of prices for the local brands as a result of the unified tax rate will be from 100 percent to 1,000 percent and "will be no longer affordable to Filipinos," Singson said. He said that low class cigaret makers will be forced to close shop and there would be no demand for low grade tobacco leaves. Considering that more than half of the farmers' produce are low grade leaves, the situation will be disastrous if there are no buyers of their low grade yields," the deputy speaker averred. "That will be the end of the industry," he declared. To illustrate his point, he said that low class cigarets are presently taxed P2.50 a pack. They are reportedly sold at P10-P12 a pack. "If taxed at P14 a pack, the selling price will be almost at par with the premium brands," he said adding that they will not stand the competition. According to him, the imported brands is greatly favored by unified taxation stressing that these cigarets that are currently being taxed P25 a pack will be charged only P14 a pack. The local premium cigarets will be charged more from P10 a pack presently to P14 a pack under the unified tax system, he said.

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