House cuts proposed increase in alcohol excise tax

MANILA, Philippines — The House of Representatives yesterday slashed the proposed hike in the excise tax rates of alcoholic beverages under a consolidated bill which merges House Bills 4839 and 8286.

According to data acquired by reporters, the technical working group (TWG) formed by the House of Representatives Ways and Means Committee has approved the revision of the proposed tax rates for alcoholic products, specifically distilled spirits and fermented liquor.

The new proposed tax rates, however, were lower than the original proposal of the Department of Finance (DOF), as part of the Comprehensive Tax Reform Program (CTRP), and the DOF-endorsed House Bill 8286 by Sultan Kudarat Rep. Horacio Suansing Jr.

Under the revised bill, the ad valorem rate for distilled spirits is proposed to be increased to 22 percent from the current rate of 20 percent. This is, however, lower than the original DOF proposed rate of 25 percent.

The bill also pushes to increase the specific tax imposed on distilled spirits from the current rate of P22.50 per proof liter to P30 per proof liter by 2019, P35 in 2020, P40 in 2021, P45 in 2022, indexed by seven percent starting 2023.

This is also adjusted downwards from the original DOF proposal of P40, P45, P50 and P55 per proof liter from 2019 to 2022, indexed by 10 percent every year thereafter.

Meanwhile, fermented liquor is also proposed to be levied an excise tax rate of P28 per liter by 2019, P32 by 2020, P36 by 2021, and P40 per liter by 2022, indexed by 10 percent starting 2023.

These are higher than the current excise tax rate of P24.44 per liter, but lower than the DOF proposed rates of P40, P45, P50 and P55 per liter from 2019 to 2022, with an additional 10-percent increase every year thereafter.

The DOF is pushing to increase excise taxes on alcoholic products as part of Package 2 Plus of the tax reform program.

Aside from alcoholic beverages, Package 2 Plus also proposes to raise the taxes imposed on tobacco products, mining and casino.

Should the DOF’s proposal be approved, the agency earlier said the government’s sin tax collection on both alcohol and tobacco is estimated to increase by P61.3 billion in the first year of its implementation.

Data from the DOF showed the Bureau of Internal Revenue’s alcohol excise tax collection in the first nine months rose 15.22 percent to P49.36 billion from P42 billion in the same period last year.

The DOF said this was also 24.35 percent higher than the P39 billion target for the period.

For the month of September, alone, collections from alcohol excise tax rose 13 percent to P5.6 billion from last year’s level.