Excise tax collection rises to P303 billion in 2024

MANILA, Philippines — The higher consumption of “sin” products last year pushed the government’s excise tax collection to P303 billion, with the gap finally narrowing to single digit.

Data obtained by The STAR showed that excise taxes inched up by 3.86 percent to P303 billion last year from the P291.78 billion generated in 2023.

While this was 6.7 percent below the collection goal of P325 billion, it was an improvement from the 13 percent shortfall recorded the previous year.

Excise tax is a levy on the production, sale or consumption of a commodity. It contributes around 12 percent to the overall collection of the Bureau of Internal Revenue (BIR).

All excisable products – alcohol, sweetened beverages, minerals, automobiles, cosmetic procedures, petroleum and non-essentials – posted increases in tax collections last year.

Only tobacco, the biggest source of excise tax, showed a decline in tax collection, although by just 0.3 percent to P134.52 billion. It was 11.5 percent below the target of P152.04 billion.

On the other hand, excise tax collections on alcohol rose by 7.29 percent to P116.09 billion from P108.2 billion. This was close to the 2024 target of P116.5 billion.

Combined, the two sin products made up 83 percent of total excise tax collection last year.

Finance Secretary Ralph Recto said this is generally due to the country’s growing economy.

Ateneo de Manila University economist Leonardo Lanzona said the increase can also be due to inflation as rising production costs can drive up prices of excisable goods, indirectly jacking up tax revenues.

Even with price increases, demand remained constant for such goods.

“Much of our excisable taxes are on commodities that are price inelastic. This means people continue to buy them even if the prices increase,” Lanzona told The STAR.

Union Bank of the Philippines chief economist Ruben Carlo Asuncion, for his part, said that even if the economy was coming from a high inflation environment, excise-related products continued to be purchased by consumers.

“If inflation continues to decline, then it would be good news for producers of these products and for the government as well,” he said.

The BIR’s enhanced campaign against illicit tobacco and cigarettes also helped narrow the gap on excise taxes.

Just recently, the agency destroyed 14.3 million packs of illicit cigarettes valued at around P2.1 billion with an estimated tax liability of P6.4 billion.

BIR Commissioner Romeo Lumagui Jr. earlier said the destruction of illicit goods is a crucial step in maintaining the integrity of BIR’s revenue collection.

In the past years, the BIR has reeled from the illicit trade of tobacco in the country, coupled with the transition to vape products.

BIR data also showed that excise tax on sweetened beverages picked up by almost 10 percent to P37.68 billion.

Excise on minerals grew by three percent to P8.62 billion, and on automobiles by 7.19 percent to P5.72 billion.

Excise on non-essentials rose by nearly 20 percent to P301.89 million; petroleum by 68 percent to P98.27 million and cosmetics procedures by 42 percent to P21.23 million.