BAT Philippines: Higher Sin Tax Has Not kept People from Smoking

Source from:  GMA News  03/11/2014

British American Tobacco, makers of Lucky Strike, said Monday that cigarette consumption has remained the same despite an increase in the excise tax on tobacco products.

The proposal to raise the so-called sin tax on tobacco products was met with concern, especially from lawmakers from North Luzon who said higher taxes could mean a drop in income for tobacco farmers because of lower demand.
 
But James Lafferty, general manager of BAT Philippines, said "consumption  was not affected, nothing has happened."
 
He added "the market did not fall apart; the market sells all their crop; farmers are fine; the tobacco companies are buying crops from Filipinos farmers."
 
He said BAT buys about 3.6 million kilograms of tobacco a year, twice the volume it bought in 2012. He added the company saw "double-digit" growth in 2013 after the introduction of its lower-tier Pall Mall brand.
 
"Sin tax is formally locked in place and we are now seeing the benefits of free liberal market," he said. BAT's market share is around one percent.
 
In contrast, Philip Morris Fortune Tobacco Corp., said in December 2013 that production volume dropped to 68 billion sticks that year against 92 billion sticks in 2012.

It wrote the Bureau of Internal Revenue in 2013 to register its Marlboro Original, Marlboro Gold Lights, Marlboro Menthol, and Marlboro Black Menthol brands in the low-price category.
 
PMFTC president Paul Riley said in his letter that the company was "willing to significantly cut its margins by introducing new Marlboro products with Net Retail Selling Prices (NRSPs) of below P11.50/pack. The company is hoping to get an additional volume of 8.9 billion sticks in 2014 which, in turn, can help the BIR collect more revenues from cigarettes."
 
In January, Bureau of Internal Revenue Commissioner Kim Jacinto-Henares said the government collected a windfall since the excise tax on tobacco products was raised a year ago.
 
"The goal for 2013 is over P33 billion in tax collection from sin products and, from what we predicted, our collection is better," she said then.

In the same report, former Health secretary Francisco Duque III said higher taxes on sin products do not necessarily translate to fewer people smoking.

"Hindi naman puwedeng mangyari lamang na tumigil dahil itinaas ang presyo ng sigarilyo... Dahil itinaas... ang buwis ay hihinto awtomatiko o hihina ang paggamit ng tabako," he said. Enditem