Senate panel wants bigger increase in tobacco tax, higher fines and stiffer penalties for violators

The Senate ways and means committee has formally endorsed to the plenary Monday the measure increasing the excise tax on cigarettes and stiffer penalties against illicit tobacco trade.

Eleven out of the 15-man committee chaired by Sen. Sonny Angara signed Committee Report No. 714 proposing an increase of P45 to P60 per pack in excise tax beginning next year to 2023 and then five percent yearly hike effective Jan. 1, 2024.

Signatories to the panel report include Senators JV Ejercito, Risa Hontiveros, Win Gatchalian, Panfilo Lacson, Francis "Kiko" Pangilinan, Nancy Binay, Loren Legarda, Minority Leader Franklin M. Drilon, Majority Leader Juan Miguel "Migz" F. Zubiri and Senate President Pro Tempore Ralph G. Recto.

Senators Angara, Ejercito, Gatchalian and Emmanuel "Manny" D. Pacquiao stand as authors of Senate Bill No. 2233 which amends pertinent sections of the National Internal Revenue Code, earmarking the incremental tobacco excise tax for human resource development programs for health professionals and programs aimed at combatting smuggling and other illicit trade.

The committee proposed the following scheduled increase: P45 per pack increase effective Jan. 1, 2020 until Dec. 31, 2021, P50 in Jan. 2021, P55 per pack in Jan. 2022 and P60 per pack effective Jan. 1, 2023.

Under RA 10963, also known as the Tax Reform for Acceleration and Inclusion (TRAIN) which took effect on Jan. 2018, the existing excise tax rates on cigarettes packed by hand and packed by machine is as follows: P37.50 per pack beginning Jan. 1, 2020; P40 starting Jan. 1, 2022; and four percent increase every year thereafter.

Selling of tobacco products at a price lower than the combined excise and value-added taxes imposed under the proposed measure shall be prohibited and violators will be punished with a fine of not less than 10 times the amount of the excise tax plus value-added taxes due but not less than P200,000 nor more than P500,000 and imprisonment of four to six years.

The existing provision slapping a fine of P20,000 to P100,000 against any person who will be found to have unlawful possession of cigarette paper in bobbins or rolls, cigarette tipping paper or cigarette filter tips without corresponding authority is sought to be increased as well to P1.5 million to P15 million and imprisonment of six to 12 years.

The bill provides more teeth insofar as penalties concerning shipment of tobacco products under false name or brand or imitation and smuggled cigarettes.

As much as P1.5 million to P15 million will will be meted against those who will transport or remove any manufactured tobacco other than the proper name or brand known to the trade and imprisonment of six to 12 years.

The present P1,000 fine slapped against any person who is found in possession of imported tax-exempt articles subject to excise tax will be increased to a minimum of P100,000 to a maximum of P200,000 if the appraised value does not exceed P250,000.

If the appraised value for the same offense exceeds P250,000 but does not exceed P500,000, the fine will be P1 million to P2 million and imprisonment of two to four years.

A fine of P3 million to P4 million and imprisonment of four to six years will be imposed if the appraised value of tax-exempt articles will be between P500,000 and P1 million.

If the appraised value is more than P1 million but not more than 5 million, the corresponding penalty will be a minimum fine of P10 million to a maximum of P20 million plus imprisonment of 10 to 12 years, the report said.

Any person who is found in possession of locally manufactured articles subject to excise tax but has not been paid in accordance with law, shall be punished with a fine of P1 million and imprisonment of five to eight years.

At least P50 million and imprisonment of five to eight years will be the penalty against manufacturer, importer, owner or person in charge of any article subject to excise tax who removes or allows or causes the unlawful removal of such articles from the place of production or bonded warehouse.

The mere unexplained possession of articles subject to excise tax, the tax on which has not been paid in accordance with law, shall be punishable with a fine of not less than 10 times the amount of the excise tax due on the articles found but not less than P1 million and imprisonment of five to eight years.

False, counterfeit and recycled tax stamps in excess of P50 million will be punishable by a fine of P500 million or up to five times the value of the illegal stamps seized and minimum of 10 years imprisonment.