Sin tax collections hit record high

MANILA, Philippines - The third year of excise tax reforms pushed tobacco and liquor revenue collections to their fastest growth on record last year, the Bureau of Internal Revenue (BIR) reported on Tuesday.

The so-called "sin" taxes hit P141.84 billion, up by a quarter from the previous year's P112.81 billion.

The growth rate was the fastest on record tracing back to 1983, according to separate BIR data.

Broken down, revenues from cigarettes surged 32 percent to P100.02 billion, while those from fermented liquors increased 14 percent to P28.26 billion.

Collections from distilled spirits and compounded liquors, meanwhile, rose 7 percent to P13.51 billion, while those from wines went up by a quarter to P500 million.

"Sin tax collections growing by a full quarter on year is no small feat," Finance Secretary Cesar Purisima said in a statement.

The Department of Finance supervises the government's revenue agencies, including the BIR. The BIR accounts for more than 80 percent of state yearly revenues.

"With the figures in for its third year of implementation, sin tax reform is a lesson in good governance...," Purisima said.

The finance chief is pertaining to Republic Act 10351, signed into law in 2012, which increased excise levies in tobacco and alcohol products for the first time in more than two decades.

The law, which provides specific excise rate adjustment until 2017, was packaged as a health measure to deter smoking and excessive drinking as well as provide funding for government health programs. 

However, BIR figures also showed market supply of cigarettes and fermented liquors rose last year, suggesting increased consumption of sin products.

Cigarette packs increased 9.12 percent, while fermented liquors inched up 1.44 percent by on liter terms. Distilled spirits and wines, meanwhile, decreased by 4.19 percent.

"I expect (Internal Revenue) Commissioner (Kim) Henares and the BIR to continue to expand the fiscal space we need to invest more heavily in universal health care," Purisima said.

Under the law, 85 percent of incremental revenues must go to universal healthcare program. The remaining 15 percent is to finance support tobacco farmers displaced by the reform.

Excise taxes form part of the total BIR collections, which were up 12 percent to P1.327 trillion as of November last year.

It was tasked to collect P1.974 trillion in 2015. The government is scheduled to report its entire fiscal performance by next month.