With 2020 budget in the bag, DOF sees Congress getting down to work on new ‘sin’ taxes

The Department of Finance (DOF) expects Congress to pass new measures increasing taxes on alcohol, heated tobacco and vaping products right after it approved the 2020 national budget.

“We’re still on track with the ‘sin’ taxes. I think yesterday the concern was to get the budget passed today so it can move forward,” Finance Secretary Carlos G. Dominguez III told reporters on Wednesday (Dec. 11).

On Wednesday morning, the bicameral conference panel of the two chambers of Congress signed the report on the proposed P4.1-trillion budget for next year.

The spin-off to package “2 plus” of the Duterte administration’s comprehensive tax reform program included higher excise on alcoholic drinks as well as levy on heated tobacco and vapes similar to rates to be slapped on cigarettes in 2020.

In July, President Rodrigo Duterte signed Republic Act (RA) No. 11346, under which excise on cigarettes will be blown upward from P35 per pack to P45 per pack in 2020, P50 in 2021 and P60 in 2023.

A 5 percent annual increase in excise on cigarettes would be the norm starting in 2024.

RA 11346 also slapped new taxes on heated tobacco products and vapes but the DOF had deemed these rates “too low” and pushed for the updated bill.

Incremental revenues from so-called “sin” taxes will augment funding for the Universal Health Care Program beginning 2020.

The Bureau of Internal Revenue (BIR) was already preparing for the implementation of a further increase in cigarette and alcohol taxes next year by ensuring that new tax stamps to be affixed on these products cannot be faked.

Edited by TSB