March 9, 2011 - PHILIP Morris Fortune Tobacco Co. Inc. (PMFTC) said it saw a decrease in the demand for cigarettes in the early part of the year following the increase in the excise tax in January. )Philippines - PMFTC has 90% of the tobacco market..)
Chris Nelson, president of PMFTC, said the industry may have difficulties in exceeding last year’s record sales amid the increase in the excise tax slapped on cigarette products. Nelson said the escalating political crisis in the Middle East, which is a major destination for Filipino workers, could also be a factor in the slowdown in the demand for cigarettes. “Last year, it was a matter of higher volumes and strong demand. But this year, what’s happening in the Middle East might also have an impact on sales,” the executive said, without disclosing figures.
“Let’s not forget that there was an increase in the excise tax on cigarettes in January and higher prices would understandably affect demand,” Nelson said.
But the market would continue to grow because of favorable demographics like the country’s increasing adult population, he said. He said the industry’s growth has always been linked to the country’s population, which has been growing by 1.7 percent to 1.8 percent every year. Since 2005, the industry has grown by an average of 2 percent to 3 percent a year.
“The market is very price sensitive since it is a factor of the consumer’s disposable income. Any sharp, unpredictable tax increase would depress the market,” Nelson said. “It would be reasonable to assume that demand would be affected but overall, the industry outlook, not specific to 2011, is favorable. The only caveat is that the right excise tax system must be in place,” he added.
The cigarette maker has been pushing for the extension of the current excise tax system, which is expiring in 2013. (Philippines - PMFTC appealed for govt to keep present tax system for cigarettes..)
“Excise tax collection on cigarettes have increased substantially to P31.6 billion last year, exceeding the government’s target of P25 billion. This proves the system works, so there is no reason for it to be changed,” Nelson said.
Republic Act 9334, or An Act Increasing the Excise Tax Rates Imposed on Alcohol and Tobacco Products, provides for increases every two years from 2005 to 2011. The scheme provides that alcohol and tobacco products are placed in four categories with varying tax rates. “There are not many laws in many countries which have worked as well as RA 9334 that allowed government to collect more taxes and at the same time, enabled the industry to plan. It is a resounding success. It is working very well so why fix it,” Nelson said.
Since January 1, cigarettes packed by machine with net retail prices of below P5 (0.11 USD) per pack would be taxed P2.72 (0.06 USD). Those priced P5 but not exceeding P6.50 per pack shall be taxed P7.56 (0.17 USD), while those priced P6.50 without exceeding P10 would be taxed P12 per pack. Those priced above P10 per pack would be taxed P28.30 (0.65 USD) per pack.
Reference: Philip Morris expects weaker demand this year by Katrina Mennen A. Valdez, The Manila Times.net, 3/9/2011.
Philippines - some related news briefs:
Philippines - PMFTC appealed for govt to keep present tax system for cigarettes..;
Philippines - Navotas City clamps down on violators of smoking ban..;
Philippines - former health ministers petition Supreme Court - cigarette packs graphic warnings..;
Quezon City, Philippines - will strictly enforce anti-smoking measures..;
Baguio City, Philippines - “Hundred Percent Smoke-Free City” campaign..;
Philippines - lawmaker proposes bill to use graphic warnings on cigarette packs..;
Philippines - cigarette butts disposal is a major problem in the Philippines..;
Philippines - PMFTC Inc. urges govt to extend existing tobacco tax on products..;
Philippines - remarks at the Asia Pacific Conference on Tobacco or Health..;
Philippines - Commission on Human Rights (CHR) support placing graphic warnings on cigarette packs...;
Philippines - physicians told not to smoke and encourage their patients to quit..;
Philippines - Coloocan City smoking strictly prohibited in all public area..:
Philippines - anti-smoking group files case to push for graphic warnings on cigarette packs..;
Philippines - bill would require 75% of locally-grown tobacco in cigarettes..;
Philippines - lawmaker files bill to make cigarette-makers share in the health costs of smoking..;
Philippines - House of Representatives turns down proposal to hke tax on cigarettes by 400%..;
Philippines - PMI warehouse opens - former smokers that no longer have a voice are upset..;
Philippines - injunction regarding picture health warnings on cigarette packs nationwide..;
Philippines - more and more women dying of lung cancer..;
Philippines - tobacco companies don't want warnings on cigarette packs..;
Philippines - President Aquino has stated he will prioritize increase in the tax on cigarettes..;
Philippines - DOH pushing for hefty tax increase on cigarettes..;
Philippines - Muslim council says smoking is forbidden..;
Philippines - PMFTC has 90% of the tobacco market..;
Philippines - Philip Morris report sales higher than annual 2-3% growth..;
Philippines - National Tobacco Assoc. will oppose any move to reduce demand for tobacco unless govt..;
Philippines - tobacco industry has obtained temporary relief from placing graphic warnings on cigarette packs..;
Philippines - govt agencies and employees barred from unnessary interaction with tobacco industry..;
Philippines - Filipino Muslims forbidden to smoke, trade cigarettes..;
Philippine congress proclaims Aquino 15th president..;
Philippines - tobacco firms claim graphic warnings on cigarette packs are illegal..;
Philippines - new president smokes but this should not slow tobacco prevention activities..:
Philippines - Department of Health wants health warnings on cigarette packs within 90 days..;
Philippines - health groups want more protection from the dangers of tobacco..;
Philippines - DOH warns government agencies to avoid partnerships or accepting donations from tobacco manufacturers..;
Philip Morris Philippines..;
Philippines - DoH pushes for picture warnings on cigarette packs..;
Philippines - PMI - FTC merger may lead smokers continuing to smoke and lure children into a life of nicotine addiction..;
Philippines - PMI and Fortune Tobacco Corp. form new company called PMFTC..;
Philippines - Tanauan City names street Philip Morris..;
Philippines - DOH campaign for 100% smoke-free workplaces..;
Philippines - total tobacco industry could be down 10% to 15% this year..;
Philippines - 2003 ban on advertising and skirting the ban..;
Philippines - June is annually observed as 'No Smoking' Month..;
Philippines may be losing the war against smoking..;
Philip Morris won't postpone Philippines Eraserheads Concert..;
Philip Morris could be criminally liable for its sponsorship of the event .in the Philippines..;
STOP PMI Sponsoring Concert in Philippines..;
Philippines - Smoker to be deported...