DOF welcomes new sin tax law

MANILA, Philippines — The Department of Finance (DOF) has welcomed the signing of a new law increasing the taxes imposed on alcoholic beverages, heated tobacco and vaping products, saying this will discourage the consumption of “sin” products, and support the implementation of the Universal Health Care (UHC) program.

“President Duterte’s decisive leadership is clearly seen once again in his signing the alcohol and e-cigarette bill into law,” Finance Secretary Carlos Dominguez said in a text to reporters.

 “This law will help improve health outcomes by reducing consumption of these harmful products, especially among the poor and the youth. It will also provide additional funding to help the UHC program succeed,” he said.

Furthermore, the finance chief lauded President Duterte’s move to line veto a provision in the law, which prohibits government authorities to investigate alcohol and electronic cigarette firms without a court order.

“His signature attests to his concern for the health of the Filipino people, while the line-item veto shows his strong resolve for strict enforcement of the law,” he said.

Dominguez likewise thanked the Senate and the House of Representatives for supporting the bill, which is part of the administration’s Comprehensive Tax Reform Program.

According to the DOF chief, the Bureau of Internal Revenue (BIR) would implement the new tax rates immediately, as the law states that the increase should be effective Jan. 1.

The bill increasing taxes on alcohol and e-cigarettes was passed by the Congress on Dec. 18, 2019.

Earlier, the finance chief expressed concern over the provision in the sin tax bill, which required government authorities to secure an order from the court before they can search warehouses.

He said this would only make it more difficult for agencies to catch frauds and tax evaders. As such, the DOF had sent a letter to Malacanang, asking Duterte to veto the item in the bill.

According to estimates from the DOF, the approved bicam version is estimated to generate P22.2 billion in incremental revenues during the first year of implementation.

However, the DOF also noted that the provision in the bill exempting all prescription medicine for high cholesterol, diabetes and hypertension from the value added tax will cut the projected revenues by P5.2 billion in 2020, resulting in a net incremental revenue of P17.1 billion.