THE floor price for the cheapest 20-stick pack of cigarettes will be P82.49 according to a tax calculation performed by the Philippine Tobacco Institute (PTI), an industry association.
The PTI, in a statement, was citing a June memorandum issued by the Bureau of Internal revenue (BIR), and computed that under this tax regime, the bulk of the final retail price will consist of excise and value-added taxes.
In Memorandum Circular No. 79-2022, the BIR provided a breakdown of the taxes on the cheapest pretax cigarettes on a per-pack basis. Apart from the P18.65 net cost of the cheapest cigarettes, excise tax adds P55 and a value-added tax P8.84, the PTI said.
The PTI said tobacco makers have to deal with competition from smuggled cigarettes, and made clear that compliant manufacturers have to follow the tax rules and sell at a certain price.
“It is estimated that P26 billion is lost in illicit tobacco trade annually. According to a Euromonitor report, six out of 10 cigarettes sold in Mindanao are illegal,” it said.
In its statement, the PTI billed the taxes as a clear indicator of which cigarettes are smuggled or noncompliant, characterizing the tax scheme as designed “To fight smuggling and selling of illegal cigarettes.”
The memorandum lists registered cigarette, tobacco, and vapor product brands that may be legally sold in the country or exported.
“The products must comply also with the requirement on graphic health warning and the affixing of BIR Tax Stamps, except for vapor products where Internal Revenue Stamps Integrated System (IRSIS) stamps are not yet available in the system,” the BIR said.
Graphic health warnings should contain “text in Tagalog in front and English at the back; and the Tarsier or Vinta design tax stamps required as proof of tax payment,” the PTI noted.
Violators are liable for fines of P200,000 at minimum and up to five years’ imprisonment for breaching the graphic health warning rules, and a minimum of P1 million and up to eight years of imprisonment for violations on tax stamps.
“Any product not included in the list, no BIR Tax Stamp, absence of the mandated graphic health warning and product which is lower than the floor/ minimum price shall be considered as unauthorized/ illicit subject to seizure/apprehension,” the BIR said.
In the three months to March, the Bureau of Customs reported that cigarettes valued at P132.56 were seized. — Diego Gabriel C. Robles