Excise Tax Threatens Cigarette Industry

MANILA, Philippines--The local cigarette industry might go up in smoke if the government does not act fast. The government may be deluding itself by favoring an excise tax law which creates an uneven playing field in the local cigarette industry.

Revenue Regulation 22-2003 imposes an increase in excise tax only on certain cigarette brands based on their current retail price while maintaining the excise taxes of others even though they have increased retail prices since 1997.

Case in point is how the brand of a local cigarette manufacturer, which the Bureau of Internal Revenue (BIR) classified as an existing one, is being taxed at P1.12 per pack despite the net retail price already exceeding P5, the cut-off for the lower-taxed category. If its net retail price P6.82 is considered, tax paid should be P8.96 per pack.

Meantime, La Suerte