DOF hopeful of ‘sin tax’ hike by January

DAVAO CITY, Philippines — The Department of Finance (DOF) remains hopeful the government would be able to impose new excise tax rates on alcohol and electronic cigarette products starting January 2020 following the passage of a bill in the Senate.

On Monday, the Senate approved on third and final reading Senate Bill 1074, which proposes to increase the excise tax on alcohol, heated tobacco and vapor products.

Finance Secretary Carlos Dominguez welcomed this development, and said the DOF is hoping to impose the new sin tax rates by the start of next year.

“I had meetings with the Senate and told them that it’s much better for businesses, especially since our tax year follows the calendar year, to start it on Jan. 1,” Dominguez said. “I’m very glad that we’re moving quickly ahead on that.”

The finance chief also remained hopeful that the final version of the bill, which is set to be deliberated by the bicameral conference committee, would be close to the original DOF version, which has a revenue gain projection of P36.5 billion.

The proposed adjustments in the excise taxes of alcohol and e-cigarette products are part of Package 2 Plus of the administration’s Comprehensive Tax Reform Program (CTRP).

In particular, the package seeks to raise the taxes on various alcoholic beverages, including distilled spirits, sparkling wines or champagnes, still and carbonated wines, and fermented liquor.

Moreover, the DOF also wants to further increase the excise tax on electronic cigarette products to P45 per milliliter, making them at par with regular cigarette packs.

Last Aug. 20, the House of Representatives approved on third and final reading its own version of the bill, as contained under House Bill 1026.

However, the DOF said the rates in the House-approved bill are lower than the proposed rates of the DOF. As a result, the projected revenue from the measure reached only P17 billion.

The DOF said proceeds from the incremental taxes on alcohol and e-cigarettes would be used to fund the government’s UHC program, which will require P257 billion in 2020.