Taxes Could Kill Philippines Cigar Industry

July 16, 2012 Taxation in Philippines

Cortez Cigarillos Macros April 09, 20112MANILLA – The government of the Philippines is being warned that the newly proposed overhaul to “sin taxes” could result in the closure of some of the country’s cigar manufacturers.

Over the weekend one of the most prominent cigar manufacturers in the Philippines Tabaqueria de Filipinas sent a letter to the president of the Philippines Bengino Aquino urging the government to drop the proposed overhaul of “sin taxes” on tobacco products sold in the country.

According to Tabaqueria de Filipinas, the new tax could lead to a 12 000% increase to the price of cigars manufactured and sold in the Philippines.

The general manager of Tabaqueria de Filipinas Tirso Ripoll explained that the newly proposed overhaul will impose a blanket tax of PHP 150 on every cigar sold in the country, while at the moment cigars are taxed at as little as PHP 1.25 each. He went on to say that the new tax does not take into account different types and size of cigars, and will significantly increase the price of cigarillos and Slim Panetela sized cigars.

Tirso Ripoll suggested that taxing cigars based on their selling price is a fairer system and would not disturb the market for tobacco products. However, proponents of the tax change claim that the new tax will be easier to administer and more efficient for tax authorities.

In the letter Tabaqueria de Filipinas claimed that the tax rise on small cigars will reduce the number of consumers buying the product and could force some manufacturers to stop production entirely, leading to a demise of the country’s cigar industry.

Photo by stevendepolo