‘Sin products’ slapped with higher excise taxes

MANILA, Philippines — Tobacco products, electronic cigarettes and alcoholic beverages collectively called “sin products” will be slapped with higher taxes effective today to help boost the government’s excise tax revenues to P258.9 billion by the end of the year, according to data from the Department of Finance (DOF).

Pursuant to Republic Act 11346, cigarettes will be levied an excise tax of P50 per pack effective today, P5 more expensive than the previous rate of P45 per pack.

Republic Act 11467, which was enacted on Jan. 22, 2020, will also increase the taxes on heated tobacco products to P27.50 per pack of 20 units effective today, coming from P25 per pack last year.

Vapor products with nicotine salt will also be taxed at P42 per milliliter starting today, up from P37 per milliliter last year, while those with conventional freebase or classic nicotine will be imposed an excise tax of P50 per 10 milliliters, also higher than last year’s level of P45.

Moreover, higher taxes will now be imposed on alcohol products, also pursuant to RA 11467.

For distilled spirits, the specific tax will be increased to P47 per proof liter effective today, P5 higher than the previous rate of P42 per liter.

The specific tax on wines will likewise be increased by six percent to P53 per liter from P50 per liter in 2020. For fermented liquor, the specific tax will increase to P37 per liter from P35.

With the new taxes in effect, the Development Budget Coordination Committee (DBCC) expects excise tax collections from tobacco and alcohol products to reach P258.9 billion this year.

This is 14.1 percent higher compared to the projected full-year 2020 collection of P226.9 billion.

Excise tax revenues from tobacco are seen to reach P177.3 billion this year, 14.39 percent higher compared to the 2020 program of P155 billion, while taxes for alcohol products are expected to rise by 13.49 percent to P81.6 billion from the 2020 forecast of P71.9 billion.

From January to October 2020, the government collected P129.2 billion in excise taxes from tobacco products, more than three percent lower than the P133.6 billion recorded in the same period last year.

Cigarette products saw a decline in sales in the earlier months of the year, particularly due to mobility restrictions imposed to slow the spread of the coronavirus pandemic.

Alcohol excise tax collections declined by 8.06 percent to P59.3 billion from January to October last year compared to the  P64.5 billion recorded in the same period in 2019.

Including other commodities, the government’s excise tax collections from January to October 2020 amounted to P351.3 billion, down 7.14 percent from the P378.3 billion recorded in the same period last year.

Nevertheless, this already accounted for almost 86 percent of the P411.7 billion revised excise tax revenue target for the whole of 2020.