Tax take from ‘sin’ products exceeds targets

Excise tax collections from tobacco and alcoholic drinks or so-called “sin” products exceeded targets as of September on the back of better compliance as well as higher rates under the Tax Reform for Acceleration and Inclusion (TRAIN) Act.

Finance Undersecretary Antonette C. Tionko told reporters that the tax take from tobacco products from January to September amounted to P106 billion, 11-percent higher than the P96-billion target.

For the month of September alone, collections reached P8.9 billion, which Tionko said was around the monthly average but 57-percent lower than a year ago due to the one-time gain from the tax settlement with homegrown Mighty Corp.

It was in September last year when Mighty started to pay the correct taxes after it was caught using fake tax stamps to evade payments.

In September 2017, collections from Mighty alone jumped 281 percent to P4.6 billion from P1.2 billion during the same month in 2016, Department of Finance data showed.

The Mighty brand is now owned by Japan Tobacco International as mandated under the homegrown cigarette manufacturer’s tax settlement with the government.

Under the TRAIN Law, the unitary excise tax slapped on cigarettes increased to P32.50 a pack effective Jan. 1, 2018, from P30 a pack last year.

In July, the cigarette excise tax further rose to P35 a pack under the TRAIN Law.

For alcohol, end-September excise tax collections reached P49.3 billion, surpassing by 24 percent the P39-billion goal, Tionko said.

Last September, the government collected P5.6 billion in excise taxes from alcoholic beverages, 23-percent above target, she added.

The DOF is also proposing to further raise “sin” taxes under the proposed tax reform package “2 Plus.”

Under the DOF’s proposal as of August, it wanted an ad valorem tax of 25 percent slapped on distilled spirits starting 2020.

Distilled spirits will also be slapped specific tax, per proof liter, of 40 percent in 2020, 45 percent in 2021, 50 percent in 2022, 55 percent in 2023 and an annual 10-percent increase beginning 2024.

Fermented liquors, per liter of volume capacity, will also be levied 40 percent in 2020, 45 percent in 2021, 50 percent in 2022, 55 percent in 2023 and a yearly 10-percent rise from 2024 onwards.

As for sparkling wines or champagnes priced P500 or less, the excise tax per liter of volume capacity will be P334.59 in 2020, P368.04 in 2021, P404.85 in 2022 and P445.33 in 2023.

Sparkling wines and champagnes that cost more than P500 will be slapped P936.82 in 2020, P1,030.50 in 2021, P1,133.55 in 2022 and P1,246.91 in 2023.

Still wines and carbonated wines with 14-percent alcohol or less will have the following excise taxes per liter of volume capacity: P40.15 in 2020, P44.17 in 2021, P48.59 in 2022 and P53.45 in 2023.

For still and carbonated wines with more than 14-percent proof but not more than 25 percent, the following rates will apply: P80.31 in 2020, P88.34 in 2021, P97.17 in 2022, and P106.89 in 2023.

Still wines as well as carbonated wines with more than 25-percent alcohol will be taxed the same as distilled spirits.

All wines will have 10-percent increases in excise tax starting 2024.