Cigarette, liquor prices also up

MANILA, Philippines - Cigarette and liquor prices went up in several outlets starting New Year’s Day due to the increase in excise taxes on tobacco and alcohol products.

Under Republic Act 10351, otherwise known as the Sin Tax Reform Law of 2012, the tax on cigarettes packed by machine and priced at P11.50 per pack or below went up from P12 per pack to P17 on Jan. 1.

For those selling for more than P11.50 per pack, the levy increased from P25 to P27.

The retail price excludes the excise tax and the 12-percent value added tax.

Starting Jan. 1 next year, the tax will go up to P21 per pack for low-priced and P28 for high-priced cigarettes, increasing to P25 and P29 on Jan. 1, 2016.

Starting on Jan. 1, 2017, there will be a single tax rate of P30 per pack. The uniform levy will then go up by four percent every year starting 2018.    

Most cigarettes are packed by machine.

There is no price classification for those packed by hand. Their tax went up from P12 per pack to P15 last Wednesday, increasing to P18 in 2015, P21 in 2016, and P30 in 2017.

The levy will also be adjusted by four percent every year starting 2018.

For fermented liquor like beer, the excise tax went up from P15 to P17 for those retailing for P50.60 or less per liter, and from P20 to P21 for those selling for more than P50.60.

The rates will increase to P19 and P22 next year, and P21 and P23 in 2016. Starting on Jan. 1, 2017, there will be a single tax rate of P23.50 per liter, which would be adjusted by four percent every year beginning in 2018.

December 2012 was the first time sin tax levies were adjusted in 16 years.

At the time Congress approved the sin tax reform bill, the Department of Finance (DOF) and Bureau of Internal Revenue (BIR) projected that there would be additional revenues of P33.96 billion for 2013, which would go up to P42.86 billion in 2014, to P60.63 billion in 2015, to P56.86 billion in 2016, and to P64.18 billion in 2017.

However, BIR Commissioner Kim Henares reported to the House ways and means committee in October that the target of nearly P34 billion during the first year of implementation of the law had already been exceeded.

This despite the efforts of tobacco and alcohol companies to “frontload” or advance their deliveries to their retail outlets, a practice designed to avoid the higher tax, she said.

Health officials informed the committee that higher levies on cigarettes have not discouraged people from smoking.

Henares blamed this on the two-price scheme, saying smokers just shifted to low-priced cigarettes.

She said the DOF and BIR had anticipated the “migration” and batted for a single rate from the start.