Data on 'Sin Tax' Questioned

Article excerpt

MANILA, Philippines --- Veteran administration Rep. Rufus Rodriguez yesterday asked government to present accurate statistics on the importation and smuggling of cigarettes and liquor to pave the way for the passage of a "sin tax" measure that is equitable and acceptable to stakeholders in the affected industries, particularly tobacco farmers and workers in liquor factories.

Rodriguez aired the appeal after noting that Bureaus of Internal Revenue (BIR) and the Bureau of Customs (BOC) may have been using incorrect data in efforts to convince Congress that the imposition of excessive taxes on tobacco products would not worsen the already serious smuggling problem in the country.

During interpellation on House Bill 5727, he pointed out that other countries experienced an increase in smuggling when they increased excise taxes on some good.

He said government should look at recent data and take into consideration several case studies from both industrialized and developing countries, showing that excessive tax increases on tobacco products lead to rampant smuggling and counterfeiting.

He chided officials of the BIR and the BoC for allegedly "peddling the outdated information to the public to push the passage of a law which could prejudice millions of Filipinos and legitimate industries."

Rodriguez said that cigarette smuggling in countries like the United Kingdom, Malaysia, Singapore, and Ireland have forced governments to reverse their policies on radical excise tax hikes and implement instead moderate increases, and even tax freezes, to keep the illicit tobacco trade under control.

"Government should use accurate information when deciding on this issue because radically increasing excise taxes on tobacco products will affect the lives of millions of Filipino workers dependent on the industry," he said.

Rodriguez said he was puzzled why BIR Commissioner Kim Henares said that the governments of Sweden, the UK, and Singapore managed to contain the illicit tobacco trade to only two percent of domestic sales in 1995.

"Why is Henares giving us old, irrelevant information? This number if true, was before government started increasing excise taxes," the Mindanao lawmaker said.

The congressman cited official data from the Singapore Ministry of Finance and the Singapore Department of Statistics which show that when the government increased the tobacco excise tax by 135 percent between 2000 and 2005, the volume of illegal cigarettes seized by Singapore Customs increased from eight million cigarettes in 2000 to 106 million in 2006. …