Alcoholic beverages and cigarettes will be more expensive this year as President Rodrigo R. Duterte has endorsed the tax increase on these products.
In a statement posted on his Facebook Tuesday, January 8, Presidential Spokesperson Salvador Panelo said the President approved the proposal of the Department of Health and Department of Finance to raise taxes on alcohol and tobacco products during the Cabinet meeting on January 7.
“This is a key public health measure to reduce deaths and disabilities due to tobacco and alcohol consumption and, at the same time, a revenue measure to fund the universal health care program,” Panelo stated.
The higher taxes on alcohol and tobacco products, also called sin taxes because these are levied on harmful products, are part of the Comprehensive Tax Reform Program of the Duterte administration.
The House of Representatives approved in early December 2018 House Bill 8677, which seeks to increase the unitary tax on cigarettes, and House Bill 8618, which raised tax rates on alcohol products.
At present, a unitary tax of P35 is imposed on each pack of cigarettes.
Under HB 8677, each pack of cigarettes shall be taxed P37.50 beginning July 1, 2019 until June 30, 2020.
The tax rate will be increased by P2.50 every year thereafter until it reaches P45.
This means that cigarettes per pack will be taxed P40 beginning July 2020; P42.50 beginning July 2021; and P45 beginning July 2022.
In July 2023 and every year onwards, the tax rate shall be raised an additional four percent.
HB 8618, meanwhile, seeks to raise excise tax rates on alcohol products to 7% from the current 4%.
It also seeks to impose on distilled spirits such as brandy, whisky, and alcopops a tax rate of 22% ad valorem on the net retail price (NRP) per proof plus a specific tax of P30 per liter beginning 2019.
The specific tax will increase by P5 every year thereafter until it reaches P45 per liter in 2022. In 2023 and onwards, the specific tax for distilled spirits shall increase by 7% each year.
The measure further integrates two specific tax rates for sparkling wine into a unitary rate pegged at P650.
This means that beginning 2019, sparkling wines will receive 15 percent ad valorem tax per liter plus P650 specific tax per liter. The specific tax will be raised by 7% beginning 2020 and every year thereafter.
In addition, HB 8618 deletes the "fortified wines" category and integrates it under still wines and carbonated wines with 14% alcohol and up. This category shall be taxed P80 per liter in 2019. In 2020 and every year thereafter, the tax shall increase 7% every year beginning 2020.
Still wines and carbonated wines with 14% alcohol or less shall be taxed P40 per liter beginning 2019. In 2020 and every year thereafter, this shall also increase by 7%.
Cooking wines that contain a salt content of not less than 1.5 grams for every 100 milliliter shall be exempted from excise tax.
Finally, the distinction between fermented liquors brewed in microbreweries and in factories is removed by HB 8618 to facilitate simpler tax administration.
Regardless of the brewery, fermented liquors shall be taxed P28 per liter volume of capacity in 2019; P32 in 2020; P34 in 2021; and P36 in 2022. It will be raised by 7% each year thereafter. (Ventures Cebu)