House OKs higher tax on liquor, cigarettes

MANILA, Philippines — The House of Representatives yesterday approved on second reading a bill increasing taxes on alcoholic products like beer and wine.

Authors of Bill 8618 said the measure aims to discourage liquor consumption and at the same time raise revenues that would be mostly allotted to treating alcoholism-related ailments.

While the House passed the alcohol tax bill in plenary, its committee on ways and means endorsed in principle the increase in the tax on cigarettes: P2.50 would be added to the current P32.50 per pack every year beginning next year up to 2022.

The approved adjustment is small compared to proposed increases contained in two measures – one authored by Quezon Rep. Angelina Tan, which seeks to increase the levy to P60 per pack beginning next year, and the other by Albay Rep. Joey Salceda, who proposed a graduated adjustment of P45, P50, P55 and P60 over a four-year period, from 2019 to 2022.

The Department of Finance supported the Tan proposal. 

Under Bill 8618, the tax on beer and other fermented liquors would go up from the current P23.50 per liter to P28 per liter starting in January, to P32 in 2020, P34 in 2021 and P36 in 2022.

Beginning on Jan. 1, 2023, the secretary of finance would increase the tax by seven percent every year.

Distilled spirits would be levied an ad valorem (value) tax of 22 percent of net retail price and a specific tax of P30 per proof liter next year.

The specific tax would be increased to P35 in 2020, P40 in 2021 and P45 in 2022, and by seven percent every year starting in 2023. The ad valorem tax would remain constant at 22 percent.

For wines, the ad valorem levy would be 15 percent of net retail price and the specific tax would be P650 per proof liter in 2019. The tax would increase by seven percent every year starting in 2020.

The committee on ways and means, chaired by Nueva Ecija Rep. Estrellita Suansing, endorsed Bill 8618.

Speaker Gloria Macapagal-Arroyo is one of the authors of the measure.

Meanwhile, several anti-tobacco advocates yesterday hit Ilocos Norte Gov. Imee Marcos and the tobacco industry for opposing proposals to increase the taxes on tobacco products.

In a statement, Health Justice Philippines president Mary Ann Mendoza said Marcos’ move is uncalled for.

“Why should politicians stop the proposed legislation on the increase of excise taxes when it can in fact benefit tobacco farmers? Republic Act 10351 mandates that tobacco growing provinces such as Ilocos Norte are guaranteed to receive 15-percent share of the incremental revenue from sin taxes,” she noted.

Mendoza revealed that in 2017, the National Tobacco Administration released a total of P210 million worth of assistance for tobacco farmers of the Ilocos region. 

Of this amount, P115 million was provided in cash for agricultural needs.

She added if the proposed increase in tobacco excise taxes will materialize, this amount is also expected to rise.

For his part, Southeast Asia Tobacco Control Alliance executive director Ulysses Dorotheo warned against statements of tobacco industry front groups such as the Philippine Tobacco Growers Association. 

He said “the tobacco industry has a long history of undermining tobacco control measures through front groups.”

This as the Action on Smoking and Health executive director Maricar Limpin has assailed tobacco manufacturers over pronouncements that raising tobacco taxes will lead to more smuggled cigarettes.

Limpin said this is only a tactic of the tobacco industry to undermine measures that can curb smoking in the country. 

“Illicit trade is a tax administration problem separate from tax rates. They are trying to confuse the issue,” she added. 

Amnesty

Earlier, the House approved on third and final reading a bill granting amnesty to delinquent taxpayers.

Suansing, Arroyo, Minority Leader Danilo Suarez and Rep. Michael Romero of 1-Pacman are among the proponents of amnesty grant.

Romero said the proposed amnesty is one of President Duterte’s legislative priorities. “It aims to give delinquent taxpayers the opportunity to have a clean slate by paying an amnesty tax and to be fully compliant on their tax obligations moving forward,” he said.

He said the amnesty, if approved, would bring in tens of billions in additional revenues for the government. With  Sheila Crisostomo