Philippine Farmers Irked by 3 PCT Tax on Gross Sales of Tobacco

Source from:  VIGAN CITY, March 7 Asia Pulse  03/08/2006

Tobacco farmers appealed to President Gloria Macapagal Arroyo to review the Expanded Value Added Tax (eVAT) law after the Bureau of Internal Revenue (BIR) imposed a three per cent tax on the gross sales of tobacco. The tobacco farmers, through the Philippine Association of Tobacco-based Cooperative (PATCO), requested the President for possible correction/clarification of the eVAT law or its implementing rules and regulations. They submitted their request to the Office of the President. The petition was endorsed by Ilocos Sur Gov. Luis "Chavit" Singson whose province is the largest producer of tobacco in the entire country. Carlos Cachola, PATCO president, said that there is no provision in the eVAT law that specifically includes tobacco under its coverage. It was learned that the tax imposition was adopted by the BIR as part of the agencys implementation of the eVat law or Republic Act No. 9337. Cachola and Andy Reyes, PATCO vice president, said that the BIR's inclusion of tobacco was based on the "non-food agricultural and marine products" that are mentioned in the EVAT law. Although transactions below P1.5 million (US$29,383) are exempted from the 10 per cent or 12 per cent VAT, these transactions shall however be subject to the payment of 3 per cent gross receipts tax, they said. In the 3 per cent tax scheme, a farmer who tilled a half hectare farm will be taxed P1,200 based on an average gross sales of P40,000. With a production cost of P17,500, they said that the farmer would only earn P21,300 in one year of tobacco farming. "The P1,200 taken away from us is like snatching one sack of rice away from our family," Cachola said. The farmers noted that government and private employees earning P275 and P300 a day, "which are much bigger than the income of tobacco farmers", are exempted from paying income tax. The farmers asked the President that exemption privilege granted to employees must also be accorded them. Tobacco growers are greatly contributing to the economy of the country with the collection of billions of pesos in excise taxes from cigarette manufacturers. Last year's collection from excise tax on tobacco reached P25 billion, according to the National Tobacco Authority (NTA). Enditem