NG eyes P5.891B from ‘sin taxes’

The government is eyeing to raise P5.891 billion in additional revenues next year from sin taxes on alcohol and cigarettes.

Next year’s additional revenue target is slightly higher than the expected revenues for this year of P5.832 billion from sin taxes, the Department of Finance (DOF) said.

The expected additional revenues will come from the indexation of sin products such as cigarettes and alcohol.

Of the P5.891 billion expected revenues next year, P2.751 billion will come from sin taxes on cigarettes while P3.140 billion will come from sin taxes on fermented liquor.

For this year, of the P5.832 billion in expected additional revenues, P2.726 billion will come from sin taxes on cigarettes while P3.106 billion will come from sin taxes on fermented liquor.

Republic Act 9334 or an act increasing the excise tax rate on alcohol and tobacco products passed in December 2004 used a minimum percentage increase to index taxes to inflation.

The new rates took effect in 2005 and the law prescribes that tax increases every two years until 2011 which is an equivalent of a percentage increase with a specific component.

Major cigarette producers include Fortune Tobacco of taipan Lucio Tan, Philip Morris Philippines Manufacturing Inc. as well as La Suerte Cigar and Cigarette Factory.

Statistics from the Bureau of Internal Revenue (BIR) showed that total excise taxes collected from tobacco products declined by 19.6 percent to P11.05 billion from January to June this year compared with P13.75 billion a year ago.

The government has been trying to raise additional revenues to wipe out its deficit by the end of next year and to raise more funds for infrastructure spending and social services.