Background of the Study

Philip Morris Fortune Tobacco Corporation cuts 30% of its workforce in its
manufacturing plant in Marikina, City. The company struggled with slow sales upon the
implementation of Sin Tax Reform Law, a state-sponsored tax that is added to
products or services that are seen as vices, such as alcohol and tobacco.
Before the Philippines raised taxes on cigarettes, the market share of PMFTC
Inc., is about 85 percent in 2012 but fell to 72 percent at the end of the year of its
implementation according to Paul Riley, President of PMFTC Inc.
Sin Tax Reform Law (Republic Act No. 10351) was crafted to revise the outdated
tax rates that made at least the tobacco products in the Philippines one of the
cheapest in the world. Through the law, the government expects to increase revenue
while at the same time discouraging current and would-be-smokers.
Raising taxes on tobacco is the most cost-effective solution for reducing tobacco
use. The experience of the Philippines and other countries, including Egypt, France
and Turkey, shows that raising tobacco taxes is feasible and has real benefits for the
health sector and beyond.
Eleven months after the implementation of the law, the Bureau of Internal
Revenue released a report that a total of P62.622 billion has been granted from taxes
imposed on tobacco, an amount that is 20.94% higher than the target collection of
P51.65 billion from tobacco products.
These voluminous data highlights the impact of sin tax reform law mostly to the
government through the collection of taxes and how effective the law in encouraging
consumers to quit smoking. However, these do not provide information regarding the

impacts of the sin tax law on the over-all performance of the Philip Morris Fortune
Tobacco Corporation.
Managerial and supervisory employees of Philip Morris Fortune Tobacco
Corporation, Inc. were selected as respondents. They are given the opportunity to
express their insights about the effects of Sin tax Reform Law to the overall
performance of the company.