To further institute reforms in Philippines’ sin taxes and strengthen moves to prevent the poor and young people from taking alcoholic products, the Department of Finance (DOF) is proposing further increase in excise taxes of these products.
DOF data show that under the proposed rates for 2019, ad valorem tax of distilled spirits will be hiked to 25 percent from the current 20 percent of the net retail price, which excludes the excise tax and the value added tax, per proof.
Under the reformed Sin Tax Law of 2012, an additional P20 per proof liter specific tax will be slapped on distilled spirits starting 2015.
This rate was mandated to be increased by 4 percent annually starting 2016.
This rate, however, is proposed to be increased to P40 by 2020, which is the target year of implementation of the proposed hikes in alcoholic products. A P5 increase in specific tax is also being considered annually until 2023.
Relatively, excise tax of sparkling wines or champagne that has a price of P500 or less per 750 ml bottle will be P334.59 for 2020, P368.04 for 2021, P404.85 for 2022 and P445.33 by 2023.
For those priced P500 and up of the same volume, excise tax by 2020 is proposed to be P936.82 while it is P1,030.50 by 2021, P1,133.55 by 2022 and P1,246.91 by 2023.
For still wines and carbonated wines with 14 percent or less alcohol content, the proposed excise tax by 2020 is P40.15 while it is P44.17 by 2021, P48.59 by 2022, and P53.45 by 2023.
For those with alcohol content of more than 14 percent but not more than 25 percent, an P80.31 per liter excise tax is being proposed for 2020, P88.34 by 2021, P97.17 by 2022; and P106.89 by 2023.
Proposed excise tax of still wines and carbonated wines with more than 25 percent alcohol content will be the same as those of distilled spirits.
In 2013, when the reformed Sin Tax Law was implemented, excise tax of a 750 ml bottle of sparkling wine or champagne regardless of proof is P250 for those priced P500 or less while it is P700 for those priced more than P500.
Still wines and carbonated wines that have 14 percent alcohol content were taxed P30 while those with more than 14 percent but not more than 25 percent or P60.
However, the law mandated that these rates shall be increased by 4 percent every year starting 2014.
Meanwhile, excise tax of fermented liquors is being eyed at P40 per liter by 2020, P45 by 2021, P50 by 2022 and P55 by 2023.
All these rates are proposed to increase by 10 percent annually starting 2024.
Earlier, Finance Secretary Carlos Dominguez III said these tax hikes are being considered not primarily to raise revenues but to lessen consumption by the poor and address ballooning cost for the government.
These higher rates are included in the proposed Package 2 Plus of the Comprehensive Tax Reform Program (CTRP) that DOF has submitted to Congress.
Of the total collections from alcohol, 70 percent are from beer while the remaining 30 percent are from the other products.
“We want to keep the ratio because cigarette taxes have risen,” he said.
Finance Assistant Secretary Tony Lambino has also said that for 2020, the estimated revenue gains from sin products is around P61.3 billion while it is P77.6 billion in 2021.PNA