Finance chief hopeful ‘sin’ taxes yield enough funds for projects

DAVAO CITY—Finance Secretary Carlos Dominguez III on Tuesday expressed optimism that the final “sin” tax rates on alcohol, heated tobacco and vaping products to be approved by Congress will allow the government to collect enough revenue to cover not only health expenditures but also additional investments in the agriculture sector.Dominguez told reporters that the Department of Finance’s (DOF) original proposal could raise some P36.5 billion from the excise taxes on alcoholic drinks and e-cigarettes next year.

The spinoff to package “2 plus” of the Duterte administration’s comprehensive tax reform program was aimed at jacking up taxes slapped on alcoholic drinks while increasing the levy on heated tobacco and vaping products similar to rates to be slapped on cigarettes in 2020.

In July, President Duterte signed Republic Act No. 11346, under which the excise tax on cigarettes will be jacked up from P35 a pack at present to P45 a pack in 2020; P50 in 2021; P55 in 2022; and P60 in 2023, to be followed by a 5-percent annual indexation from 2024 onward.

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

The Senate on Monday approved its version of the spinoff “sin” tax bill, but reports showed that heated tobacco products would have a lower rate than that on vapes.

While Dominguez had yet to see the revenue projection for the Senate-approved bill, he was hoping that its revenue would be closer to the DOF proposal than the Congress-approved version, that would generate only P18 billion.

Since the sin tax bill already hurdled the Senate, Dominguez expects it to be signed by the President into law before the end of the year and implemented starting Jan. 1, 2020. INQ