Tobacco institute questions excise tax targets of government

MANILA, Philippines - The Philippine Tobacco Institute (PTI) has questioned the facts and figures of the Department of Finance (DOF) and the Bureau of Internal Revenue (BIR) that points to a lesser excise tax collection in 2011.

PTI president Rodolfo Salanga said a recent document, entitled 2011 Budget Expenditures and Sources of Financing which was submitted to Congress, showed a smaller excise tax collection, from P61.5 billion this year to only P55.64 billion next year.

Of this amount, the government expects the highest decrease to come from taxes on tobacco products at P20.2 billion, a significant reduction of 14 percent compared with the target P25.8 billion this year.

Salanga said he is surprised how the DOF and the BIR were able to come up with this figure, when these same agencies reported that the government had already collected P16.9 billion in excise taxes for the first seven months of this year compared to only P12.6 billion during the same period last year.

If such a trend continues, Salanga estimates that the government would be able to collect P11 billion more between August and December this year.

 “Thus, total excise tax collections from tobacco products alone for the year 2010 may reach P28 billion,” Salanga said. “This is a far cry from what the purported document had estimated.”

The amount is expected to go up further next year when another round of excise tax increases are scheduled beginning Jan. 1, 2010, Salanga said.

Under Republic Act 9334, excise tax rates on alcohol and tobacco products will again be adjusted next year.

Salanga suggested that the government focus its effort in plugging leakages such as those in income taxes, import duties and value-added tax.

 “Going after tax cheats by requiring the computerization of each and every company’s financial records and linking such a computer system with the BIR is a huge step in plugging a tax hemorrhage,” Salanga said.

 “I think this is where the DOF and the BIR should focus their attention instead of submitting documents that purportedly show a bleak excise tax collection,” he said.