More taxes on ‘sin products’ eyed

On top of further raising the excise taxes on tobacco and alcohol products, the Department of Finance is also seeking to stop the sale of cigarettes per stick as well as the use of e-cigarettes under its proposed tax reform package “2 plus.”

Documents obtained by the Inquirer showed that under the proposed amendments to the tobacco excise tax regime folded into package 2 plus, the DOF wanted to “prohibit the importation and sale of e-cigarettes.”

The DOF also wanted to ban the sale of cigarettes per stick while at the same time including a provision on plain packaging, citing that it was “one of the best tobacco control practices in the world.”

The proposed tax package 2 plus will also “unify cigarettes packed by hand and packed by machine into one subsection” as the DOF noted that they had the same excise tax rate already under the unitary system implemented since last year.

The DOF adopted the proposal of Sen. Manny Pacquiao under Senate Bill No. 1599 to slap cigarettes with an excise tax of P60 a pack in 2019, P65.40 in 2020, P71.29 in 2021, P77.70 in 2022, to be followed by a 9-percent increase every year beginning 2023.

Under the second tranche of excise tax increase mandated by the Tax Reform for Acceleration and Inclusion (TRAIN) Act implemented effective July 1, cigarettes are now slapped levies of P35 a pack.

For tobacco products, the DOF proposed to increase the excise tax rate from P2.13 a kilo in 2018 to P2.35 in 2019 and a further 10-percent increase each year starting 2020 onward.

In the case of chewing tobacco, the excise tax will be further raised from P1.82 a kilo this year to P2 next year and 10-percent increases annually beginning 2020.

As for cigars, the ad valorem tax based on net retail price per cigar from 20 percent in 2018 will be a higher 25 percent starting 2020.

The specific tax per cigar will go up from P6.08 this year to P6.69 in 2019 and will increase by 10 percent every year thereafter.

In the case of alcohol, distilled spirits will be slapped an ad valorem tax rate based on the net retail price price per proof (excluding excise and value-added taxes) of 25 percent from 2019 to 2022, to be followed by 10-percent increases yearly from 2023 onward.

The specific tax per proof liter of distilled spirits will also increase to P40 in 2019, P54 in 2020, P50 in 2021, P55 in 2022, and 10-percent increase annually from 2023.

At present, the Sin Tax Reform Law under Republic Act No. 10351 slapped an ad valorem tax rate of 20 percent and a specific tax per proof liter of P22.49 on distilled spirits.

As for wines, sparkling wines/champagnes regardless of proof, if the net retail price per bottle of 750 mL (excluding excise and VAT) regardless of proof is P500 or less, will be taxed P335 in 2019 (up from P304.17 in 2018); those that cost more than P500 will be slapped P937 next year (from P851.66 this year).

The excise tax on still wines and carbonated wines containing 14-percent alcohol by volume or less will rise to P40 in 2019 from P30 in 2018. For still wines and carbonated wines containing more than 14 percent but not more than 25-percent alcohol by volume, the rate will go up to P80 next year from P60 this year.

Fortified wines containing more than 25-percent alcohol by volume will be taxed similar to distilled spirits.

All wine excise taxes will further increase by 10 percent every year thereafter from 2020 onward.

As for fermented liquor, regardless of net retail price per liter of volume capacity, the excise tax of P24.44 a liter in 2018 will rise to P40 in 2019, P45 in 2020, P50 in 2021, P55 in 2022, and further 10-percent increases yearly beginning 2023.