Downgrading of Marlboro Undervalues Sin Tax Law

Downgrading of Marlboro Undervalues Sin Tax Law

MANILA, Philippines – Philip Morris Fortune Tobacco Corp. (PMFTC) is requesting for the Bureau of Internal Revenue (BIR)’s approval to downgrade Marlboro cigarettes from the high-price to the low-price category of the Sin Tax Law. PMFTC wants to take advantage of the lower taxes imposed on the low-price category in order to regain its market share as its production volume has fallen to 68-billion sticks this year from 92- billion in 2012.

According to PMFTC President Paul Riley, this down trading is a result of smokers’ switching to lower-priced cigarettes, including Mighty Corp. products, which has increased its market share significantly from 3 to 30 percent.

“It’s obvious that PMFTC is driven only by profits and has no desire to protect the public’s health nor to help the government reach its tax targets,” says Dr. Ramon Paterno of the Universal Health Care Study Group, National Institutes of Health. “While keeping the original Marlboro products in the premium category, they are also willing to cut margins by selling new Marlboro products below PhP 11.50 per pack – a dangerous proposition for health because this could mean more brands selling at a cheaper price; cheaper cigarettes that can be purchased by the youth and the poor. Thus, circumventing the main intention of the Sin Tax Law, which is to decrease the consumption of cigarettes to protect the Filipino from the harms of tobacco.”

Currently, Marlboro brands pay an excise tax of PhP 25, belonging under the high category, while brands from the low-price category pay half the amount at PhP 12 per pack. In 2017, all brands will be required to pay a uniform tax rate.

“News on the decline of Marlboro sales clearly shows that the price at which cigarettes are sold is a much bigger factor than brand loyalty,” says Irene Reyes, Managing Director of HealthJustice Philippines. “We must take advantage of this fact and realize that PMFTC’s request is just another strategy in compromising the positive health benefits of the Sin Tax Law.”

According to Dr. Ulysses Dorotheo, Project Director of the Southeast Asia Initiative on Tobacco Tax (SITT), “Economic research has shown that cigarette prices are inversely related to cigarette demand. When Thailand raised its cigarette excise rates 10 times between 1991 to 2012, it resulted in an almost 300 percent gain in revenues, while overall smoking prevalence dropped by 8 percent over the same period.”

A study by the Southeast Asia Tobacco Control Alliance shows that cigarette prices of the popular local brands in Cambodia and the Philippines are among the lowest across ASEAN countries and in the world.

“We should not favor any of the tobacco giants by further lowering the taxes of their products. Tax and price increases reduce the affordability of tobacco products and are among the most effective measures to protect public health by reducing tobacco consumption,” continues Dorotheo. ###

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