Drilon: Tobacco farmers to get P6B more from new sin tax bill

Posted at 11/12/12 11:15 AM

MANILA, Philippines - Senator Franklin Drilon on Monday said local tobacco farmers will get an additional P6 billion a year from revenues raised by the new sin tax bill.

Drilon, acting chairman of the Senate ways and means committee, said this is on top of the P4 billion allocation under the old sin tax law, which means the total benefit for farmers will amount to P10 billion a year.

In an interview on ANC's Headstart, Drilon doused concerns that the new bill will hurt the livelihood of tobacco farmers because local cigarette manufacturers source only 15% of their tobacco requirements from farmers, while the other 85% come from imports.

"The tobacco farmers will not be prejudiced here... Right now without the law being amended, the tobacco farmers get P4 billion a year as their share of the tobacco tax. With this law, they will get P6 billion additional, so a total of P10 billion. This is for assistance to improve tobacco leaf quality and also for alternative crops," he said.

"One company purchases 90% of our requirements for cigarttes. Philip Morris Fortune Tobacco is a monopoly, in effect. If they increase the price and volume, the farmers don't have to worry... All these fears of farmers getting disadvantaged is absolutely untrue and without basis."

Drilon's version of the bill projects P45 billion in revenues for the first year of implementation.

But Senator Ralph Recto, who quit as ways and means committee chairman after his version of the sin tax was widely criticized, said government will not be able to collect the P45 billion because higher tax rates on alcohol and cigarettes will lead to a decline in sales volume.

However, Drilon noted that the price of cigarettes in the Philippines is one of the lowest in Asia, which contributes to the high prevalence of smoking.

"We have the highest smoking prevalence in Asia and the lowest priced cigarettes... A pack of Marlboro is $8 (abroad) and here it's less than a dollar," Drilon said.

"We hope with higher rate of taxes, the young doesn't get into the habit of smoking," he added.

Drilon expressed confidence the sin tax bill will be passed within the week or Monday next week.

"We will try to pass both the sin tax and national budget before the end of the year," he said.  - With ANC