The department of finance has submitted a bill to the house of representatives that would impose a uniform excise tax on nearly all cigarette brands starting 2010.

The excise tax would account to PHP 14 (EUR 0.23) a pack and the rate would be adjusted annually to account for inflation. The proposed bill also calls for the imposition of two tax rates in 2009 prior to the adoption of a single rate in 2010.
In 2009, the excise tax would be PHP 8 for brands with a net retail price of PHP 6.50 a pack or below, and PHP 14 for those whose net retail prices are above PHP 6.50 a pack.
Cigarettes packed by hand would be levied an excise tax of PHP 2.47 a pack on the first year, and the rate would increase every year commensurate with inflation. Cigars would be taxed PHP 200 a piece on the first year, and the rate would increase annually by an amount equal to the product’s inflation.
The bill does not allow a reduction of current tax rates that are already higher than the rates being proposed in the bill.
Finance secretary Margarito Teves earlier said the government was pushing for a single excise tax rate on cigarettes because the current system was too complicated and difficult to administer.
The complexity of the cigarette tax structure was one factor blamed for shortfalls in excise tax collection in the past.
Philip Morris Philippines (PMP) said that it is in favour of the imposition of the single tax rate but only after the implementation of the four-tiered excise tax rate, which will end in 2011.
"We support the principle of a single tax rate but the question is the timing and how we go about it," said PMP managing director Chris Nelson.
Nelson pointed out that existing excise tax law, which implements the four-tiered tax rates on cigarette products, was also supported by PMP and the industry.
According to data from the department of finance (DOF), the government stands to earn as much as PHP 12.9 billion (EUR 208 million) in the first year of implementation of a single tax rate on cigarettes. (sra)