Amendment to Section 137(b), Title IV of the NIRC As Amended Re: Price of Cigarettes

April 30, 1974

PRESIDENTIAL DECREE NO. 441-A

AMENDING SECTION 137(b), TITLE IV, OF THE NATIONAL INTERNAL REVENUE CODE, AS AMENDED, BY REVISING THE MAXIMUM RETAIL PRICES PER PACK OF LOCAL CIGARETTES AND PROVIDING FOR NEW RATES OF SPECIFIC TAX ON HIGH-PRICED LOCAL AND IMPORTED CIGARETTES

WHEREAS, the worldwide inflation and soaring prices have unavoidably increased the cost of production of local cigarettes like other consumer goods which situation has been further aggravated by the very pressing oil crisis never before experienced in contemporary times; acCTSE

WHEREAS, the local cigarette industry, through its association, has strongly and validly manifested that unless existing statutory maximum retail prices per pack of local cigarettes are revised to keep pace with the rising prices of raw materials of local and foreign origin for manufacturing cigarettes, the local manufacturers now plagued with rapidly increasing production costs may soon find their products no longer profitably marketable at present maximum retail prices prescribed by law;

WHEREAS, it has been found that there is a need for providing a new rate of specific tax on local cigarettes which in the future may be manufactured and sold at retail prices within the reach of` the very discriminating smokers only who can well afford to pay much more than the prevailing retail prices of local cigarettes subject to the existing highest rate of specific tax;

WHEREAS, as a further encouragement and added protection for the local cigarette industry upon which thousands and thousands of factory workers and tobacco planters wholly depend for their livelihood, and in line with our dollar conservation policy, it has been deemed necessary as a complementary measure to impose a higher rate of tax on imported cigarettes which are in fact being consumed only by affluent smokers and those belonging to the upper strata of our society.

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers in me vested by the Constitution, do hereby decree and order:

SECTION 1. Section 137(b), Title IV, of the National Internal Revenue Code, as amended, is hereby further amended to read as follows:

"SEC. 137. Specific tax on cigars and cigarettes. — On cigars and cigarettes there shall be collected the following taxes:

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"(b) Cigarettes —

"(1) On cigarettes packed in thirties, the retail price of which per pack does not exceed sixty centavos, on each thousand, three pesos.

"(2) On cigarettes packed in thirties, the retail price of which per pack exceeds sixty centavos but does not exceed eighty centavos, on each thousands, five pesos.

"(3) On cigarettes packed in twenties, the retail price of which per pack does not exceed ninety centavos on each thousand, eight pesos.

"(4) On cigarettes packed in twenties, the retail price of which per pack exceeds ninety centavos but does not exceed one peso and twenty centavos, on each thousand, fourteen pesos.

"(5) On cigarettes packed in twenties, the retail price of which per pack exceeds one peso and twenty centavos but does not exceed one peso and fifty centavos, on each thousand, sixteen pesos.

"(6) On cigarettes packed in twenties, the retail price of which per pack exceeds one peso and fifty centavos but does not exceed one peso and eighty centavos, on each thousand, eighteen pesos.

"(7) On cigarettes packed in twenties, the retail price of which per pack exceeds one peso and eighty centavos but does not exceed three pesos, on each thousand, twenty-five pesos.

"(8) On cigarettes packed in twenties, the retail price of which per pack exceeds three pesos, on each thousand, thirty-two pesos.

"(9) If the cigarettes of local manufacture are mechanically wrapped or packed, the tax shall be increased by one hundred and twenty per centum per thousand cigarettes.

"Cigarettes shall be considered mechanically wrapped or packed when at any stage of the wrapping or packing a machine or any mechanical contrivance shall have been used.

"(10) If the cigarettes are of foreign manufacture, regardless of the retail price per pack or the manner of wrapping or packing thereof, on each thousand, sixty pesos." ACaTIc

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SECTION 2. The foregoing amendment to Section 137(b) of the National Internal Revenue Code, as amended, revising the maximum retail prices per pack of local cigarettes shall not be construed to mean as allowing any down-grade reclassification of said cigarettes whereby any existing brand or brands of local cigarettes duly registered with the Bureau of Internal Revenue under a particular tax rate or class at the time of the effectivity of this Decree shall be allowed to be reclassified and be subject to a lower rate of specific tax by reason of the revised maximum retail prices herein prescribed.

SECTION 3. During the period of sixty (60) days from the date of effectivity of this Decree, all cigarette manufacturers concerned shall be allowed to use their cigarette labels imprinted with the old maximum retail prices per pack of their products, after which they shall comply with the statutory requirement under Section 137 (b) of the National Internal Revenue Code, as amended, regarding the printing of the maximum retail price on each pack of local cigarettes. That statutory requirement does not, however, apply to cigarettes of local manufacture, not mechanically wrapped or packed, subject to the highest rate of specific tax and for which the law does not set any maximum retail price per pack.

SECTION 4. The Secretary of Finance, upon recommendation of the Commissioner of Internal Revenue, shall issue the necessary rules and regulations to implement this Decree.

SECTION 5. This Decree shall take effect on May 1, 1974.

Done in the City of Manila, this 30th day of April, in the year of Our Lord, Nineteen Hundred and Seventy-Four.