THOUSANDS of tobacco farmers have expressed their vehement opposition to a proposal of the Department of Finance to have a single excise tax rate for tobacco products.

The National Federation of Tobacco Farmers’ Associations and Cooperatives Inc. also appealed to lawmakers to postpone the implementation of the proposed new excise tax scheme on tobacco and alcohol products as this would have an impact on their livelihood

In a letter to President Aquino, NAFTAC urged the Chief Executive to study carefully any proposal to increase excise tax on tobacco products as it constitutes new taxes.

NAFTAC Chairman Ernesto Calindas said any increase in the current excise tax rate would affect the livelihood of some 2.7 million tobacco farmers and their families. NAFTAC is composed of farmer leaders in Northern Luzon and other tobacco growing provinces.

“We are very concerned with the DOF proposal to have a unitary tax rate of P30 per pack of cigarette. This kind of tax adjustment would kill the tobacco industry which is our main source of livelihood since there will be a steep decline in the demand for local tobacco leaf,” Calindas added.

Instead of implementing a single rate system, the farmers want lawmakers to maintain the current four-tiered system under Republic Act 9334, which has proven to be a stable and significant source of revenue for the government. 

Since its enactment in 2005, the average annual government revenues for tobacco products amounted to P25 billion, benefitting tobacco growing regions and tobacco farmers, the group said.

“A single tax rate will only benefit importers at the expense of the farmers and manufacturers since it will wipe out the less expensive cigarettes which utilize local tobacco. “ NAFTAC said.

The group added that under the current four-tiered system, home-grown tobacco enjoyed increasingly higher floor prices from 2005-2011.

Meanwhile, Calindas said his group is dismayed over the turn-about of Budget Secretary Florencio Abad in supporting the imposition of a unitary tax rate on alcohol and tobacco products despite concerns earlier voiced out by his agency on such a proposal.

“Maliwanag na sinabi ni Abad nu’ng Nov. 2010 lamang na pag-aralan na mabuti ng Kongreso ang pagpataw ng mas mataas na buwis sa sigarilyo at alcohol dahil base na rin sa pag-aaral ng gobyerno, hindi rin sigurado na tataas ang koleksyon ng buwis ’pag itinaas ito,” Calindas said.

In a position paper submitted to the committee on ways and means of the House of Representatives, the Department of Budget and Management has earlier recommended that “the revenue impact of increasing the tax on alcohol and tobacco products as proposed has to be studied as to its possible counter-effects on volume, and more generally on the market or industry.”

The DBM also pointed out in its position paper that the unitary system is regressive.