Japanese cigarette maker wants preferential tax eliminated

British American Tobacco, the world’s second-largest cigarette maker, has asked the government to remove the preferential treatment the products of PMFTC Inc. and other old cigarette brands to level the playing field in the Philippines.

James Lafferty, general manager of British American Tobacco Philippines, said the company was open to any increase in the excise tax rates and a change in the structure of the so-called sin taxes if it would allow new entrants like BAT to do business in the country.

“We just simply want the government to level the battle field in order for us to destroy the monopoly. Monopoly, as you can see, is never good for the economy,” Lafferty said referring to PMFTC, which controls 94 percent of the domestic tobacco market.

Old brands under the present excise tax scheme enjoy a preferential tax treatment, or P12 in excise tax for every P32 pack of cigarette. The government granted the tax rate on tobacco companies operating in the country before 1996.

Companies that came in after 1996 like BAT, however, are levied an excise tax of P28.30 per pack despite selling its cigarettes for P32 a pack, the same as that of PMFTC.

“If you came in just after 1996, or specifically in 1997, which happened in our case, we have to pay higher excise tax even if we are selling the product at the rate of PMFTC,” Lafferty said. “This is the most unfair thing that I ever seen.”