This is one case where the equal application rule plainly does not apply.

Nature has simply designed plants or crops to survive and thrive in different conditions – genetic structure, climate, soil quality, water requirement, and the use of emerging plant or crop technology used.

The result is a “gradation” of crop yield or harvest, say, Class A, B,C or D.

Of course, different grades mean different prices. A higher grade also entails a higher demand for the product.

In this sense, quality (higher grade) translates into higher quantity in terms of price.

And since taxation is based on taxable values, a unitary tax is, therefore, is illogical, impracticable, and most decidedly unfair to crop farmers or producers.       

Thus, we are not surprised to learn that administration lawmakers on Monday warned the government against its proposed unitary tax system in the sin-tax reform bill, claiming the proposal would kill the cigarette, distilled spirtits, and fermented liquor industries  and encourage the smuggling and counterfeiting of tobacco products.

The congressmen made the warning as the House ways and means committee started deliberations on House Bill 5727, authored by Cavite Rep. Joseph Emilio Abaya, which seeks to restructure the excise tax system for alcohol and tobacco products by adopting a unitary tax system.

House Deputy Minority Leader and Zambales Rep. Milagros Magsaysay asked the Finance department for a breakdown of the estimated incremental revenue on cigarets if the unitary tax system became law.

But COOP NATCCO Party-list Rep. Jose Ping-ay said imposing a single tax rate for low-grade and high- or premium-grade cigarets would kill the industry.

“It will definitely kill the local industry because nobody will buy the local class Virginia leaves anymore,” Ping-ay said last week. “Why? Because they will be imposed the same tax as the premium leaves. This will encourage the … smuggling and counterfeiting of cigarets.”

La Union Rep. Eufranio Eriguel inquired about what would happen if the tax reform bill became law.

“What will be the effect on our farmers, our stakeholders?” he said. “If the price is increased, the effect on the farmers will be tremendous ... It means more people will smoke high-end cigarets.”

Quezon City Rep. Vincent Crisologo also raised the issue on cigaret smuggling. “Was the possibility of smuggling contended with...?” he said.

The Finance department has defended the proposal, saying the estimated higher revenue from cigarets, distilled spirits, and fermented liquor industries as a result of it was P60.7 billion on the first year, P84.3 billion on the second year, P118.4 billion on the third year, P128.5 billion on the fourth year, and P139.3 billion on the fifth year.

Finance Undersecretary Jeremias Paul Jr. said the tax on tobacco was not the main reason for cigaret smuggling but corruption.

“[Smuggling] can be controlled by legal means such as prominent tax stamps and serial numbers, special package markings … , improving corporate auditing, better tracking systems, and good governance,” Paul said.

Assistant Secretary Teresa Habitan said that while the government was going for a unitary rate, that would not happen on the first year of implementation of the tax reform law.