DOF keen on higher alcoholic drink tax

MANILA, Philippines — The Department of Finance (DOF) remains keen on pushing for reforms to increase the excise tax rates on alcoholic beverages under Package 2 Plus of the Comprehensive Tax Reform Program (CTRP).

According to documents acquired by reporters, the DOF is proposing for an increase in the tax rates on all types of alcoholic beverages, including distilled spirits, wines, and fermented liquors.

The implementation of the measure is expected to start by 2020, based on the latest projections made by the Development Budget Coordination Committee (DBCC).

Under the revised proposal, the DOF is proposing to raise the ad valorem tax on distilled spirits from the current rate of 20 percent to 25 percent of the net retail price per proof starting from 2020 onwards.

In addition to the ad valorem tax, the specific tax imposed on distilled spirits is also proposed to rise from the current rate of P20 per proof liter to P40 in 2020, P45 in 2021, P50 in 2022, and P55 in 2023. The rate is expected to further increase by 10 percent every year thereafter.

The DOF also seeks to increase the excise tax on sparkling wines or champagnes based on the net retail price per bottle of 750 milliliter volume capacity.

If the net retail price reaches P500 or less, the excise tax is proposed to increase from the current level of P250 per liter to P334.59 by 2020 and 10 percent every year thereafter.

For sparkling wines or champagnes with a net retail price of more than P500 per 750 ml capacity, the DOF is seeking an increase in excise tax from P700 per liter to P936.82 by 2020, and 10 percent every year thereafter.

 Excise taxes on still wines and carbonated wines containing 14 percent alcohol or less are proposed to increase from P30 per liter to P40.15 by 2020, and 10 percent every year thereafter.

The rates for still wines and carbonated wines with alcohol content of more than 14 percent, but not more than 25 percent is sought to increase from P60 per liter to P80.31 by 2020 and 10 percent every year thereafter.

 Still wines and carbonated wines with more than 25 percent alcohol content will be taxed the same as distilled spirits, according to the DOF proposal.

Meanwhile, fermented liquors will be levied an excise tax rate of P40 per liter starting 2020, P45 by 2021, P50 by 2022 and P55 per liter by 2023. This is proposed to increase by 10 percent every year thereafter.

Earlier, Finance Secretary Carlos Dominguez said the DOF wants to increase the excise tax rates on alcoholic beverages, much like what it did to tobacco products under the Tax Reform for Acceleration and Inclusion (TRAIN) law.

“Of the sin taxes, 70 percent are tobacco and 30 percent are alcohol. We want to keep the ratio. The rates for cigarettes increased so the rates for (alcohol) should increase too so that it’s still 70:30,” Dominguez said.

 Aside from increasing taxes on alcoholic products, Package 2 Plus also proposes for adjustments in the taxes of tobacco products, mining and casino.

Finance assistant secretary Antonio Lambino said with the measure in place, the sin tax collections — including alcohol and tobacco — of the government is estimated to increase by P61.3 billion by 2020 and P77.6 billion by 2021.