DOF pushes higher taxes on alcopops, e-cigarettes

MANILA, Philippines — The Department of Finance (DOF) will make a last-minute appeal to the House of Representatives to approve the proposed increase in excise taxes of alcopops and electronic cigarette products in the plenary level, according to a top official.

Last Monday, the House ways and means committee approved and endorsed to the plenary the House Bill 1026, which seeks to raise excise taxes on alcohol products.

This was after members of the panel invoked Section 48 of the House Rules, which speeds up the approval of bills that have already been passed on third and final reading in the 17th Congress.

Since the passed bill was the same as the one approved in the last Congress, Finance Undersecretary Karl Kendrick Chua said it does not yet have provisions to adjust sin taxes on alcopops or flavored alcoholic beverages, and e-cigarettes, such as vapes and heat-not-burn devices.

Chua, however, said the DOF would still push for the House to amend the committee-approved bill during plenary deliberations to ensure the inclusion of the missing provisions and the adoption of the original DOF proposal.

“They invoked Section 48 so that it won’t go through the usual hearings. Because that’s a rule, that if it’s approved in the previous Congress, you can approve exactly the same. So we will take up with the plenary our proposed amendments,” Chua said.

The DOF official noted that there’s no need for the additional provisions to go through the House committee’s scrutiny, and that it can go straight toward plenary deliberations “because it’s part of the same subject, which is amending the Tax Code.”

Aside from the non-inclusion of the alcopops and e-cigarette provisions, Chua said the committee-approved bill also provides lower alcohol excise tax rates than the original DOF proposal.

“What they approved is a lower rate, which is like P30 to P32 per liter. What we proposed is P40 per liter,” he said.

As a result, Chua said the estimated revenue gain from the House panel-approved version was cut by almost half. 

“The revenue difference is almost half. Our version is around P33 billion, what they approved is around P15 billion,” he said.

If the proposed amendments do not go through the House plenary, Chua said the DOF can still try in the Senate or bicameral conference committee to ensure the adoption of the original DOF version of the bill.

The proposed adjustments in the excise taxes of alcohol and e-cigarette products are part of Package 2 Plus of the administration’s Comprehensive Tax Reform Program.

In particular, the package seeks to raise the taxes on various alcoholic beverages, including distilled spirits, sparkling wines or champagnes, still and carbonated wines, and fermented liquor.

The DOF eventually decided to add alcopops to the proposal to discourage young Filipinos from drinking alcoholic beverages.