Excise tax collections fall below target

MANILA, Philippines —  The country’s excise tax collections slipped to P140 billion in the first semester, short of target, making the full-year goal unlikely to be met amid pending laws that could push revenues.

Data obtained by The STAR showed that excise taxes went down by 3.31 percent to P139.64 billion from January to June compared to P144.41 billion in the same period last year.

Similarly, this was 36 percent below the collection goal of P219.43 billion for the six-month period.

Bureau of Internal Revenue (BIR) assistant commissioner Jethro Sabariaga said there was an imposition of huge growth rate on excise taxes this year due to the assumption that new tax measures such as the excise tax on single-use plastics and new mining fiscal regime would be passed.

“It was an aspiration to have these laws passed and to help in our collection effort. Unfortunately, excise is a very demand-driven kind of tax,” Sabariaga told The STAR on the sidelines of the BIR’s 120th anniversary yesterday.

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 BIR.

Excisable products include alcohol, tobacco, petroleum and minerals.

Data showed that the biggest decline was recorded in tobacco excise, which slipped by more than 16 percent to P58.65 billion from P70.12 billion in 2023. It was also 35 percent below the target of P90.8 billion.

“Previously, the excise tax on tobacco was collected for vaporized products by the BOC (Bureau of Customs). It is only in the second half of this year that excise tax collection will be attributed to the BIR because of the revenue stamps,” Sabariaga said.

The BIR has also been attributing the decline to shifting consumption patterns from tobacco toward vape products.

 “As I see it, it will not be a one-to-one correspondence, one pack of cigarette is not equivalent to vaporized product in terms of length of consumption,” Sabariaga said.

On the other hand, excise on alcohol rose by 8.3 percent to P54.37 billion from P50.23 billion. However, it was 10 percent below the target of P60.53 billion.

Combined, the two sin products accounted for  81 percent of the total excise tax collection in the first half.

Excise tax on minerals went down by three percent to P4.01 billion and was 64 percent short of the target of P11.1 billion due to lower global prices of nickel.

Given the first half performance, Sabariaga said the BIR is unlikely to meet the P325 billion target for 2024.

As of end-June, BIR is only at 43 percent of its full year target.

“First, we are waiting for the laws to be passed and second, even if they get passed, you have to prepare for that especially the excise on plastic and the windfall tax and royalty for mining,” Sabariaga said.

BIR data also showed that excise tax on sweetened beverages increased by 14 percent to P19.49  billion, automobiles grew 3.75 percent to P2.9 billion and petroleum soared to P83.65 million.

Non-essentials excise tax went down two percent to P123.37 million while cosmetics procedures rose by 4.89 percent to P8.83 million.