Aug 022014

MANILA, Philippines – The Bureau of Internal Revenue (BIR) is not keen on initiating the filing of a bill that will set a floor price on cigarettes, saying this is more of a health measure than a revenue-generating measure, its top official said.

“The minimum floor price on cigarettes is a health measure not a revenue measure, meaning any proposal like this should emanate from the health department, not from the BIR,” said BIR commissioner Kim Henares.

While she suggested setting a minimum price for all cigarettes sold in the country, Henares said the BIR would not actively push for it, reiterating it was merely a proposal.

“It was just a suggestion because health advocates were complaining about the proliferation of cheaper cigarette brands,” she said.

The proposal, if implemented and enacted into law, is seen to support an ongoing campaign to improve the general health level of Filipinos and prevent tobacco manufacturers from selling at a loss.

Henares said imposing a minimum retail price on cigarettes would level the playing field and curb tobacco consumption in the country.

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The Department of Finance had welcomed the proposal amid the widespread availability of discounted tobacco products in the market.

Sales of cut-price cigarettes have soared in the past year despite the passage of the sin tax reform law, which aims to increase the number of smokers who quit.

Setting a floor price makes it illegal to trade at a price which is lower than a specified level by the state.

One objective of the sin tax law is to make tobacco and alcohol products more unaffordable to the public and raise the needed funds for health programs of the government.

Excise tax reform act advocates such as the FCTC Alliance of the Philippines and the Action for Economic Reforms likewise posed no objection to the suggestion of legislating a minimum price for all cigarette brands sold in the country.

In an industry dominated by global giant Phillip Morris, Bulacan-based cigarette firm Mighty Corp. has managed to press on and survive by offering products at P1 per stick despite the higher excise tax imposed by the government. As a result, its market share surged to over 20 percent from a mere seven percent in less than a year as low-income consumers shifted to lower-priced cigarette brands.

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