Cigarette consumption rises 3% in H1

MANILA, Philippines - The volume of cigarettes being withdrawn from manufacturing plants rose three percent in the first half, indicating the continued demand for this product.     

Data from the Bureau of Internal Revenue showed that cigarette volume removals increased to 1.47 billion in the first six months of the year from 1.43 billion packs in the same period in 2013.

Industry observers say cigarette consumption remains predominant because of the proliferation of low-priced products in the market.

Total volume of removals of fermented liquor fell by 1.22 percent to 685.09 billion liters.

The government exceeded its excise tax collection target for the first six months of the year by 32 percent to P46 billion, primarily due to the implementation of the sin tax reform law beginning January 2013. 

The amount marked a 30 percent increase from the P35.46 billion collected in the same period a year ago.     

Of the total, P28.18 billion accounted for excise tax payments by tobacco makers and P17.8 billion in excise tax collection.

Excise tax collections for alcoholic drinks reached P17.8 billion.     

Without the sin tax law, the government would have only collected P26.91 billion in excise taxes or just 2.25 percent higher than the 2013 levels. 

The landmark measure effectively raised the tax rates on tobacco and liquor.  It also calls for mandating the gradual shift to a unitary tax rate over the medium term. 

The law is targeted to boost state revenues and discourage the use of cigarettes.  The increase will be implemented annually across several products until 2017.     

For this year, the government is eyeing a 22 percent growth in six tax collections to P104.8 billion.  The bulk of which or P65.15 billion will come from cigarettes and P39.545 billion from alcoholic beverages.

Critics claim the government continues to lose substantial revenues due to illicit tobacco trade in the country.

Based on a study commissioned by leading tobacco firm Philip Morris, the Philippines lost an estimated P15.6 billion in revenues because of non-payment of correct taxes by domestic cigarette manufacturers while the consumption of domestic illegal tobacco nearly tripled from 6.1 billion in 2012 to 17.1 billion last year.