Senators address smuggling threat with cigarette tax hike: Gatchalian

ABS-CBN News

Posted at May 29 2019 09:20 AM | Updated as of May 29 2019 09:54 AM

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MANILA -- A phased increase in excise taxes on cigarettes over 4 years will help curb "unintended consequences" such as smuggling that was raised by tobacco groups, a lawmaker said Wednesday.

The Senate is rushing debates on "sin tax" increases after President Rodrigo Duterte certified the measure as urgent. Lawmakers only have until next week to pass the law before they go on break.

"The general trend is to curb smoking overtime but cognizant of the unintended consequences," Sen. Sherwin Gatchalian told ANC's Headstart.

The proposed increase will be "disastrous," said Japan Tobacco Philippines president Manous Koukourakis, citing the experience of Malaysia, Singapore and Thailand, where revenues dropped as some people switched to smuggled cigarettes that are cheaper.

The Senate versions of the bill seek to at least double the current excise tax of around P30 per pack to curb smoking and raise funds for universal healthcare.

Koukourakis said Japan Tobacco would "swallow the pill" and accept the new tax rates if the government gives the company "some peace of mind" during the 4-year period when the duties will be raised.

"We will need the support an the collaboration of the government to go after other alternatives," he said. "In broad terms, we will be able to survive," he said.