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Cigarette sales to fall

The new chief executive of Philip Morris and Fortune Tobacco Corp. expects industry sales to decline following the implementation of a graphic health warning on cigarette packs. PMFTC president Roman Militsyn told reporters last week sales would drop but the industry would survive.

“With graphic health warnings as a regulatory measure, we expect there is an impact on the industry as experienced by other countries,” Militsyn said at the sidelines of the 9th Bright Leaf Agriculture Journalism Awards in Pasay City.

“We expect some decline [on sales] but we also believe that the industry will continue to be there and that is a good potential in terms of the profitable growth of the industry going forward,” Militsyn added.

He said while some people had become conscious of their health, other adults were still smoking.

Militsyn also said the implementation of the sin tax gave the tobacco industry “a good predictability.”

“We think that it is a good roadmap for the fiscal environment for the industry going forward,” he said.

Militsyn said the review of the sin tax law next year had allowed the company to work with the government and other industry players in reducing illicit trade in the country.

“I think what is important while the sin tax law continues to roll out and tax continues to increase, we have to make sure that illicit trade particularly contraband and counterfeit will remain under control, and that’s where we continue to work with the government agencies with the whole industry trying to make sure that illicit trade overall is under control,” he said.

The London-based Oxford Economics released a report in September, showing that one in every five cigarettes were illicit consumption in 2014 and cost the government around P22.5 billion in foregone revenue.

Domestic illicit trade, according to Oxford, are cigarettes that are manufactured by the trademark holder, but are illegally sold and consumed in the same market, without the payment of excise taxes and value-added tax.

Of the total 102.3 billion cigarettes consumed in 2014, both legal and illicit, 19.9 billion sticks were domestic illicit.

“So these are the numbers, you can agree or disagree with them but still we are talking about double digits. It is quite an important challenge we believe [that] important to pay attention to,” Militsyn said.

“We’re always being ready and we continue to work with the government and ready to work with all industry players in order to make sure that we address this issue so that the tax stamps are ready to promote the brand and illicit trade and contraband is lessen in the country,” he added.

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