DISMANTLING the annexes and price classification freeze of certain brands are at the core of the excise tax reform proposals that we are pursuing, the Finance chief said.
“These provisions serve nothing else but to protect the market shares of existing companies at the expense of public health,” Finance Secretary Cesar V. Purisima said on Thursday.
The government is backing House Bill 5727, authored by Cavite Rep. Joseph Emilio A. Abaya, abolishing the annexes and price classification freeze of certain brands. The bill is currently pending before the House Ways and Means Committee.
Republic Act 8240 enacted in November 1996 froze taxes due from tobacco and alcohol products based on net retail prices on October 1, 1996. This means that brands sold as low-priced cigarettes in 1996 but have since been repackaged as premium-priced cigarettes continue to be taxed as low-priced.
In comparison, “new brands” that entered the market after the law was passed, and therefore not included in the annexes, are taxed according to their current net retail price.
A survey by the Bureau of Internal Revenue (BIR) conducted in late-2010 showed this discrepancy in the case of Winston FK SP and GD American Blend Charcoal Filter with the former being an “old brand” and the latter a “new brand.”
BIR said Winston was sold at P22.93 per pack, while American Blend at P23.60. The price difference was less than P1, but data will reveal that Winston was only taxed P7.56 per pack, while American Blend had a higher rate of P12.
“Removing the brackets and price classification freeze will not disadvantage locally-produced cigarettes over imported ones. There is no provision in the bill creating such a distinction,” Purisima explained.
As to distilled spirits, the Finance chief reiterated that the excise tax reform is necessary “to comply with the ruling of the World Trade Organization.”
“We want this reform because we know that this will not only result in higher revenues for the government, but more importantly, improved public health services for the Filipino people,” he explained.
Former Finance and Health secretaries on Wednesday signed a manifesto of support to the HB 5727. Among the signatories were former Finance secretaries Margarito B. Teves, Ernest Leung, Ramon R. del Rosario, Jr. and Roberto F. de Ocampo and former Health secretaries Jaime Galvez-Tan, Esperanza I. Cabral, Juan M. Flavier, Alberto G. Romualdez, Jr. and Alfredo R. A. Bengzon.
“With overwhelming support from renowned experts in public finance and public health, we have no doubt that the facts are on our side,” Purisima said.
