The House of Representatives, voting 184-2 with one abstention, approved on third and final reading a bill raising the excise taxes on alcoholic drinks and electronic cigarettes.
The higher taxes on “sin” products form part of the Duterte government’s Comprehensive Tax Reform Program (CTRP).
It is aimed at providing a sustainable revenue stream that will fund the Universal Health Care Act and curbing consumption of alcohol and electronic cigarettes (e-cigarettes), including heated tobacco and vapor products.
House Bill No. 1026 seeks to amend the Republic Act No. 8424 or the “National Internal Revenue Code of 1997”. The House had passed a similar bill in the 17th Congress, but the Senate did not.
The measure passed on third and final reading on Tuesday, August 20, 2019, is a substituted version that expanded the scope of the bill to include e-cigarettes.
Excise tax based on weight or volume capacity or any other physical unit of measurement is referred to as specific tax while an excise tax based on selling price or other specified value is called the ad valorem tax.
Under the bill, the following taxes will be imposed on:
Distilled spirits - ad valorem tax of 22% (from the current 20%) and additional specific tax of P35 (from the current P20) per proof liter in 2020. The specific tax will increase by P5 annually until it reaches P45 in 2022, after which it will increase by 7% yearly.
Sparkling wines - ad valorem tax of 15% of the net retail price and specific tax of P696 per liter in 2020. The specific tax will increase by 7% yearly starting January 1, 2021.
Still wines and carbonated wines - ad valorem tax of 15% of the net retail price and specific tax of P60 per liter in 2020.
Cooking wines with salt content of not less than 1.5G/100ml are exempted.
ALCOPOP (pre-mixed or ready to drink alcoholic beverages) and fermented liquors (beer, lager beer, ale, porter) - specific tax of P32 per liter in 2020, P34 in 2021 and P36 in 2022.
Heated tobacco products - specific tax of P45 per pack in 2020 to be increased by P5 annually until it reaches P60 per pack in 2023. The tax will then increase by 5% annually starting 2024.
Vapor products (salt nicotine) - specific tax of P30 per milliliter in 2020 to be increased annually by P5 until it reaches P45 per milliliter in 2023. The rate will increase by 5% starting 2024.
Vapor products (conventional nicotine) - specific tax of P4.50 per milliliter in 2022, with an increase of P0.50 until it reaches P6 per milliliter in 2023. It shall be raised by five percent each year afterwards.
The bill states that heated tobacco products and vapor products should not be sold at prices lower than the sum of the excise and value-added taxes imposed on the product.
The bill also seeks to create a Joint Congressional Oversight Committee to be referred to as the Oversight Committee on Illicit Trade on Excisable Products, which shall be co-chaired by the respective chairpersons of the House and Senate Committees on Ways and Means. (Ventures Cebu)