Excise tax collection to hit P332 billion — DOF

MANILA, Philippines — The government’s excise tax collections are expected to hit P332.3 billion this year due to the increased tax rates on cigarettes, alternative smoking devices and alcohol, the Department of Finance (DOF) said yesterday.

Citing a report made by Finance Undersecretary Karl Kendrick Chua, the DOF said the government is expected to collect P332.3 billion in “sin taxes” this year, 23.49 percent higher than the actual collection of P269.1 billion last year.

The DOF said the projected increase would be driven by higher rates on tobacco and alcohol products as well as the introduction of new taxes on electronic cigarette devices such as heated tobacco and vaping products.

By 2024, DOF estimates that the government would be able to collect about P480 billion in excise taxes.

“This is a low-end projection,” Chua said in a report to Finance Secretary Carlos Dominguez.

In July last year, Duterte signed Republic Act 11346 which increased excise taxes on tobacco products and introduced a new tax on e-cigarettes. The DOF said RA 11346 is projected to raise P14.9 billion in additional revenues this 2020.

Duterte then signed RA 11467 last January, which yet again increased the taxes on alcoholic beverages and e-cigarette devices.

It also includes a provision exempting the sale and importation of all prescription medicines for high cholesterol, diabetes and hypertension from the value-added tax (VAT).

This VAT exemption would then be extended to include medicines for mental illness, cancer, kidney diseases and tuberculosis by 2023.

The DOF expects to generate P17.1 billion in additional revenues from this measure this year. Over the next five years, it is also estimated to increase revenues by P102.1 billion.

Chua said 60 percent of proceeds from RA 11467 would be earmarked for the Universal Health Care program, while 20 percent would be spent for medical assistance and health facilities.

The remaining 20 percent will go to programs that will help the government fulfill its commitments under the United Nations (UN) Sustainable Development Goals (SDGs).

According to DOF data, the government’s excise tax collections in 2019 amounted to P269.1 billion which is almost double the P143.5 billion recorded in 2015.

“In 2015, the total revenues from sin products was P143.5 billion. Last year, the total was P269.1 billion or 87.5 percent more. Starting 2020, sin taxes now include the collection of excise taxes on tobacco, alcohol, sweetened beverage and e-cigarette products,” Chua said.