Excise tax collection declines to P292 billion

Amid inflation, illicit trade

MANILA, Philippines — Lower consumption of ‘sin’ products as prices of essential goods increased last year resulted in the drop of excise tax collections by the government, further exacerbated by the still rampant illicit trade.

Data obtained by The STAR showed that excise taxes went down by 6.34 percent to P291.73 billion last year, from the P311.47 billion generated in 2022.

This was also 13 percent below the collection goal of P335.04 billion.

Excise tax is a levy on the production, sale or consumption of a commodity. It contributes around 12 percent to the overall collection of the Bureau of Internal Revenue (BIR). Excisable products include alcohol, tobacco, petroleum and minerals, among others.

BIR assistant commissioner Jethro Sabariaga attributed this to the change in consumption pattern of Filipinos for sin products such as alcohol and tobacco.

“For alcohol, the imported ones outpaced our local market as the pricing gap has been closed,” Sabariaga told The STAR.

“As for tobacco, vape consumption lessened cigarette consumption and vape is mostly imported.  There’s also a proliferation of illicit trade,” he said.

Tobacco excise tax slipped by 16 percent to P134.87 billion from P160.55 billion in 2022. It was also 20.6 percent below the target of P169.86 billion.

On the other hand, excise  tax on alcohol inched up by 6.85 percent to P108.46 billion from P101.5 billion. However, it was 1.58 percent below the target of P110.2 billion.

Combined, the two sin products made up 83 percent of total excise tax collection last year.

“There’s also the fact that in a high-inflation environment, excisable goods which are mostly non-essentials, take a hit,” Sabariaga said.

“People still prefer to eat than drink alcohol,” he said.

Further, the BIR is also reeling from the illicit trade of tobacco in the country, one of the factors why the agency is missing its collection target for excise products.

There is also the transition to vape products and the BIR had difficulties in going after illegal ones as it has become a backyard industry whose production can be done even at home.

“For this year, our concentration would be on the excise tax, especially on vape as many are shifting,” BIR commissioner Romeo Lumagui said.

“We will be doing heavy enforcement against illicit trade to give justice to the business environment  and put flesh to the saying that crime does not pay. We want a business environment where our honest taxpayers can compete and win,” Sabariaga said.

BIR data also showed that excise tax on sweetened beverages declined by 3.3 percent to P34.37 billion, automobiles decreased by 2.68 percent to P5.34 billion and petroleum slipped by 74 percent to P58.93 million.

On the other hand, excise tax on minerals inched up by four percent to P8.21 billion, non-essentials surged by 68 percent to P409.41 million, and cosmetics procedure jumped by 67 percent to P12 million.