The Senate has recently asked its ways and means committee to carefully review the proposed two-tier tobacco tax system before they actually start tackling the proposal in a hearing.
This means that for now, there will be no movement for this proposal until the review is completed. But what exactly is this proposal and how does this affect us, particularly the smokers?
House Bill No. 4144 or the two-tier tobacco tax system was approved by the Lower House in December last year and then forwarded to the Senate for their own approval.
The proposed measure seeks to amend the Sin Tax Reform Law, to have two levels of taxation on tobacco products, hence the two-tier system.
Simply put, the cheaper cigarette brands priced at P11.50 and below will be taxed P32 while the premium brands or those costing more than the said amount will be taxed P36.
Currently, there is a unitary tax system in place that taxes all brands, regardless of pricing, a flat tax rate of P30 per pack.
So if the two-tier tobacco system gets passed into law, the cheaper brands will become relatively cheaper compared to the premium brands that on the other hand will become pricier due to the tax gap.
According to The Standard, only Mighty Corp., which is the leading producer of non-premium cigarettes supports the approval of two-tier system. Meanwhile, all other cigarette brands wanted to stick with the unitary tax system.
So far, the respective secretaries of the Departments of Health, Agriculture, and Finance have all expressed their opposition of the two-tier system.