Tax takings of the Bureau of Internal Revenue (BIR) rose at a faster pace in January on the back of higher excise taxes on a number of goods under the first tax reform package, but the government is bracing for a surge in cigarette smuggling amid higher prices.
BIR Commissioner Caesar R. Dulay told reporters last Friday that the January collections of the country’s biggest tax agency grew 15 percent from P147.4 billion in January 2017.
The growth in the BIR’s January collections outpaced the 14-percent increase a year ago.
Dulay said that in the case of the new excise tax on sugar-sweetened beverages under the Tax Reform for Acceleration and Inclusion (TRAIN) Act, the BIR collected P2 billion last month.
Signed by President Duterte in December 2017, Republic Act No. 10963 or the TRAIN Law that took effect starting January 1, 2018 jacked up or slapped new excise taxes on oil, cigarettes, sugary drinks, and vehicles, among other goods, to compensate for the restructured personal income tax regime that raised the tax-exempt cap to an annual salary of P250,000.
On the other hand, the Bureau of Customs ordered all ports in the country to be “extra-vigilant against illegal entry of cigarettes.”
“In view of the increase in excise taxes on cigarettes under the TRAIN Law, it is anticipated that attempts to smuggle cigarettes into the country will rise,” Customs Deputy Commissioner Edward James A. Dy Buco said in a February 7 memorandum to all district collectors, deputy collectors for assessment as well as deputy collectors for operations.
Under the TRAIN Law, the unitary excise tax slapped on cigarettes rose to P32.50 per pack effective January 1 from P30 a pack in 2017.
The TRAIN Law also mandated a further increase in the cigarette excise tax rates to P35 per pack from July 1, 2018 to December 31, 2019; P37.50 a pack from January 1, 2020 to December 31, 2021; and P40 from January 1, 2022 to December 31, 2023.
Finance Secretary Carlos G. Dominguez III recently told reporters that with the increase in prices of cigarettes due to the TRAIN Law, the government is on the lookout for smuggled packs.
“Since we raised cigarette prices, obviously there will be more incentive to smuggle, so we have to watch out,” Dominguez has said.
Dominguez nonetheless noted that the cigarettes being smuggled so far were only in small volumes. /kga