Prices of alcoholic drinks such as distilled spirits and fermented liquor are expected to increase soon after a House of Representatives panel approved Tuesday higher excise taxes, although at lower levels compared with the original proposal of the Department of Finance (DOF).
A technical working group (TWG) of the House ways and means committee green-lighted an increase of the ad valorem rate slapped on distilled spirits to 22 percent, on top of specific tax rates of P30, P35, P40, and P45 per proof liter yearly between 2019 and 2022 and a 7-percent annual hike beginning 2023.
However, the rates approved by the TWG were below the DOF’s proposal as well as House Bill (HB) No. 8286 of Sultan Kudarat Rep. Horacio Suansing Jr.
Their original proposals were to increase to 25 percent of the ad valorem tax on distilled spirits. For the specific tax rates for the period 2019-2022, the DOF and Suansing had proposed P40, P45, P50, and P55 per proof liter before a 10-percent jump annually starting 2023.
At present, the ad valorem tax on distilled spirits stood at 20 percent per proof, while the specific tax was P22.50 per proof liter.
In the case of fermented liquor, the TWG gave its go ahead to excise tax hikes of P28 in 2019, P32 in 2020, P36 in 2021 and P40 in 2022 before an index of 7 percent yearly beginning 2023.
But the DOF and HB 8286 had proposed to raise the specific tax rates slapped on fermented liquor to P40, P45, P50, and P55 from 2019 to 2022, after which the taxes will be raised by 10 percent annually from 2023 onwards.
The current excise taxes for fermented liquors were P24.44 per liter, as well as a higher P34.07 if brewed and sold at microbreweries or small establishments.
In a statement Tuesday, the non-government Action for Economic Reforms (AER) said the House committee also approved the shift to a unitary excise rate of P650 per bottle for sparkling wines.
The AER pointed out that the excise tax hikes approved by the committee fell below the rates and increases mandated under Republic Act (RA) No. 10351 or the Sin Tax Reform Law of 2012.
“Today is a sad day for the health and well-being of the Filipino people. The alcohol tax rates approved by the committee on ways and means in the Congress will neither prevent Filipinos from being exposed to the adverse health and social effects of alcohol consumption, nor generate a significant amount of revenue that would be crucial in funding key health measures in the country,” Maricar Limpin of the group’s Action on Smoking and Health Philippines as well as head of the Philippine College of Physicians’ cluster on public health said.
“Scientific evidence now shows that alcohol consumption at any levels increases risk to cancers especially cancers of the gut. More than revenue, we are looking at alcohol tax as a health measure,” added Limpin.
For his part, former Philippine College of the Physicians president Tony Leachon noted that: “Every year, there are over 37,000 deaths that are attributable to alcohol consumption, and alcohol drinking prevalence has remained stable at over 40 percent despite the past tax increase.”
“Today’s hearing served as an opportunity to significantly increase the excise tax and discourage its use, the same way the tax increase has decreased cigarette smoking. Instead, we were given an alarmingly low tax increase, and the well-being of our countrymen remains at great risk,” Leachon added.
According to AER fiscal policy team head Jo-Ann Diosana, “it is very disappointing that the committee in charge of looking for effective revenue-generating measures chose to settle for a measure that would generate only P7.8 billion in incremental revenue, while Rep. Suansing’s bill was expected to generate around P43 billion in incremental revenue.”
“It is especially alarming, because a significant funding gap still exists for the Universal Health Care (UHC) bill. Without a sustainable source of funds, we will not be able to reap the benefits of such a landmark reform,” according to Diosana, citing that earlier Department of Health (DOH) estimates showed that if passed into law, the implementation of the UHC bill will entail P164 billion in additional funds. /kga