Lucky Strike Maker to Buy More PHL Tobacco Leaves

Source from:  GMA NEWS 07/17/2012

British American Tobacco (BAT), maker of Lucky Strike cigarettes, said they would increase their purchases of tobacco leaves this year and invest more in the Philippines once the sin tax bill is passed into law. BAT Philippines general manager James Lafferty said the company is planning to buy 3.6 million kilos this year from 1.8 million kilos last year. "We will double this year to 3.6 million kilos. We're about 5 percent of the market," said Lafferty. Cigarette executive added they are planning to invest as much as $200 million once the bill is passed into law. Lafferty said that the company could start making investments in 2013 once the sin tax reform measure is approved at the end of this year. BAT Philippines has supported the sin tax reform, saying the current tax law in the country imposes higher taxes to post-1996 manufacturers based on current retail prices. Meanwhile, the current sin tax law or RA 9334 imposes a multi-tiered tax system where tax rates are pegged at 1996 prices for manufacturers who entered the industry before 1996. The 1996 price levels make excise tax cheaper for current tobacco monopoly Philip Morris Fortune Tobacco Corporation which – on record –entered the industry in 1995, Lafferty noted. "It's about entry. And because we're a new company we pay more. It's not fair," Lafferty said. Philip Morris Fortune Tobacco controls 96 percent of the Philippine market. Lafferty said the two-tier tax system under the sin tax reform measure enforces the unitary taxes whether or not a company is a new or an old player in the industry, thus “leveling the playing field” in the market and breaking the monopoly. "It's simple: We just want a chance to compete," Lafferty said. During the first year of its implementation, the sin tax bill or House Bill 5727 of Cavite Rep. Joseph Abaya seeks to increase the price per pack of cigarettes costing P11.50 to P23.50. Cigarettes costing P11.50 and above per pack will be sold for P31.80. Enditem