LT Group Inc., the listing holding company of tycoon Lucio Tan, said Tuesday another round of tax increases on cigarettes and alcohol could adversely affect the industry sales.
LT Group president Michael Tan said in an interview following the annual stockholders meeting that while the company was not against tax increases, such adjustments should be moderate.
“We were included in package 1 of Train [Tax Reform for Acceleration and Inclusion law]. So I guess they [government] wanted additional revenues. We are not against tax increases but the hikes should be moderate,” Tan said.
“Continual price increases to pass on higher excise taxes may result in a further drop in industry volumes, which would also hurt government revenue collection,” Tan said.
Tan said the total volume of the tobacco industry had declined since the implementation of sin taxes in 2012 and 2018. From a low of P2.72 per pack of 20 sticks in 2012 for the lower tier and P12 per pack for the upper tier, the excise tax on cigarettes is currently at P35 per pack or about 3 times to 13 times more in the span of only seven years.
While this resulted in higher selling prices, the industry volume fell from 109 billion sticks in 2012 to 73 billion in 2018.
Tan said the higher taxes would result in the proliferation of illicit cigarettes. “The tax-driven price increases make it attractive to make profits from the illicit trade,” Tan said.
He said there were proposed bills seeking to increase tobacco tax between P90 to P60 per pack in a bid to curb cigarette consumption among Filipinos.
LT Group is allocating P16 billion to P17 billion in capital expenditures this year. Tan said this year’s capital spending would be higher than the usual P10-billion program because of the planned P12-billion rights offering of banking arm Philippine National Bank.
The group also plans to spend P2 billion for the expansion of property unit Eton Properties Philippines Inc. The remainder will be allotted for other businesses.
Tan also confirmed that LT Group’s unit Tanduay Distillers Inc. was looking to acquire Roxas Holdings’s sugar assets in Batangas.