Inconsistencies in the law devastate Life Span Cigarette Brands

MANILA, Philippines - The local cigarette industry might go up in smoke if the government does not act quickly.

The government is an illusion can be detected by favoring an excise tax law that creates an uneven playing field in the field of local cigarettes.

Revenue Regulation 22-2003, also known as the cigarette tax, seems to favor local brands over foreign brands.

Case in point is the way FC Fortune International, which classified the Bureau of Internal Revenue (BIR) as an old brand, is taxed at P1.12 per pack despite the net retail sales exceeding P5, the cut-off for low-taxed category. If your net price of retail, P6.82, is considered, the tax paid should be P8.96 per pack. Similarly, La Suerte Astro & Memphis is taxed at P5.60 per pack based on their recent price survey (both exceeding P5).

On the other hand, Philip Morris' L & M, a "new second investigation, is taxed at P5.60 per pack despite the net retail sales of P4.92. In fact, there is equal conditions taxation brands of cigarettes because RR 22-2003 favors old brands, many of which are local brands, new brands, many of whom are foreigners.

This "system" is unfair cigarette manufacturers who pay taxes to consumption of more than cry for the abolition of RR 22-2003 for many reasons, one of which runs counter to the agreements with the World Trade Organization (WTO). The system does not protect new, foreign brands that have entered or would enter the local market. Their argument is that if RR 22-2003 causing alienation of foreign cigarette companies, what is to keep the same happen to foreign companies in other sectors? If this happens, it is unlikely that the products of the exports and imports and income and savings they will be hit hard.

Another point that raised the ire of farmers affected is as the BIR believes that the net retail sales of "new brands" in determining the tax rate but not "new launches, which are regarded by the law and RR 22-2003 as "old brands." The "uniformity in taxation," says that the current prices of all brands should be recognized, or not at all. The BIR should focus on all brands, not just some. In this context, all brands of cigarettes of all holdings of tobacco sold at local level must be subject to the same conditions. In short, they want equal treatment before the law.

The third is inconsistent with the law dictating that "variants of existing brands of cigarettes which are introduced after the onset of RA 8240 are taxed under the highest classification of any variant of this brand, new variants with higher prices should be taxed as such. This shows the imperfect nature of the position of the BIR on variations of an old brand with low price is not subject to an adjustment to current prices.

Inconsistencies some cigarette makers have noted in RR 22-2003 are the reasons why many consumers have been surprised to see the brand that no longer attend. Also why new brands seem to materialize all at once. This is only the cigarette industry.

The smoke signals are loud and clear, the government must change RR 22-2003 in a tax system that will pave the way for a level playing field that will benefit both the country and cigarette manufacturers.