BIR’s sin tax collection up 81.5% in 11 months

The Sin Tax Reform law has been effective in boosting government revenues as the collection of taxes on cigarettes and alcohol in November already exceeded the full-year target, according to the Bureau of Internal Revenue.

In a report released Friday, the BIR said that, from January to November, excise tax collection on cigarettes and alcoholic beverages amounted to P91.6 billion.

The amount exceeded the full-year target of P85.8 billion, which took into account the impact of the Sin Tax Reform law that took effect in January.

The amount likewise marked a year-on-year increase of 81.5 percent from the P50.4 billion collected in the same period last year.

Under the Sin Tax Reform law, tax rates on alcoholic beverages and tobacco have been raised to boost state revenues and reduce the incidence of smoking.

The increase will be implemented annually for most products until 2017, after which the tax rate will be indexed to inflation to avoid eroding government revenues.

This year, the tax rates for cigarettes are set at P12 a pack for brands costing less than P11.50, and P25 a back for the more expensive brands.

For fermented liquor, the tax rates for this year were set at P15 a liter for brands costing less than P50.60 a liter, and P20 per liter for the more expensive ones.

For distilled spirits, the tax rates for this year were set at P20 plus 15 percent per proof liter.

BIR Commissioner Kim Henares presented the report during a forum on the Sin Tax Law held yesterday.

During the forum, she shrugged off comments that the revenue objective of the law could be defeated because of the rise in smuggling activities.

Some industry players have expressed concern that the higher sin tax rates would promote the smuggling of cheap cigarettes into the country, adversely affecting legitimate businesses.

But Henares said that the alleged rise in smuggling was not being reflected on the BIR’s sin tax collection.

For 15 years, the Department of Finance, parent agency of the BIR, lobbied for the passage of the Sin Tax Reform Law.

The DOF said the Philippines had one of the lowest sin tax rates in the world, noting that the the cigarette and alcohol industries could allow the government to shore up its revenues.

The DOF noted that, even with the hike in sin tax rates, the Philippines continues to have the lowest taxes on cigarettes and alcohol in the world.