Tax regime could backfire

A tobacco growing and processing firm yesterday urged the Philippines’ government to assess the effects of its first tax reform package before raising duties further, according to an ABS-CBN News story.
Tobacco demand had dropped since taxes were raised in 2012 and would likely go down further after this year’s duty increase, the president of Universal Leaf Philippines, Winston Uy, was quoted as saying.
“Imposing an additional tax hike will result to even less tax collection, Uy said. “Consequently, this will decrease generated revenues, part of which goes to health coverage for the poor.
“Tobacco gives the biggest contribution to the government through livelihood and employment. Why focus [on] tobacco alone? Why not focus [on] other products that contribute less than tobacco?”
Under the second package of reforms, the government will not submit its own proposal on tobacco excise taxes but will instead support a bill filed by Senator Manny Pacquiao, the Department of Finance said in a statement.
Pacquiao is seeking a unitary cigarette excise tax of P60 this year and a mandatory nine percent annual increase.