The higher excise tax rates on alcoholic drinks and e-cigarettes will be retroactively applied effective Jan. 1, Finance Secretary Carlos Dominguez III said on Thursday.
“The Bureau of Internal Revenue (BIR) will implement the new law with new rates on alcohol and e-cigarette effective Jan. 1, 2020, as the law clearly says Jan. 1 is when the new rates apply,” Dominguez said, referring to Republic Act No. 11467 signed by President Duterte on Jan. 22.
The new rates for heated tobacco and vaping products supersede the lower levy under RA 11346 or the Tobacco Tax Law of 2019 signed by Mr. Duterte in July last year, which also took effect on Jan. 1.
For e-cigarettes, the earlier-approved RA 11364 provided that heated tobacco products will be levied excise of P10 a pack beginning Jan. 1, 2020, to be followed by yearly hikes of 5 percent starting 2021.
As for vapor products, individual cartridges, refills, pods or containers of their liquid solutions will be slapped tax of P10 per 10 milliliter, or a larger P50 on top of P10 per additional 10 ml for those being sold in volumes higher than 50 ml in 2020.
RA 11467 had higher levies than RA 11364—the newer law will impose P25 per pack on heated tobacco products starting 2020, and a higher P45 per 10 ml for conventional freebase vapor products and P37 per ml in the case of salt nicotine vapes.
It will also prohibit selling heated tobacco and vaping products to those age 21 and below as well as nonsmokers.
Dominguez had said the rates to be slapped on e-cigarettes under RA 11364 were “too low,” hence the Department of Finance (DOF) later on pushed for rates at par with traditional cigarettes during its lobby at the start of the 18th Congress.
For Dominguez, “President Duterte’s decisive leadership is clearly seen once again in his signing the alcohol and e-cigarette bill into law.”
“His signature attests to his concern for the health of the Filipino people, while the line-item veto shows his strong resolve for strict enforcement of the law,” Dominguez said, referring to the President’s veto of the Congress-approved provision mandating prior court order before authorities can raid suspected unscrupulous traders of alcohol and e-cigarette products.
“This law will help improve health outcomes by reducing consumption of these harmful products, especially among the poor and the youth. It will also provide additional funding to help the Universal Health Care program succeed. We thank the Senate and the House of Representatives for their support to this priority reform program,” Dominguez said.
Based on DOF estimates, the new sin tax bill will raise P22.2 billion when implemented in 2020, lower than the agency’s original proposal to rake in P36.5 billion in revenues during the first year of implementation.
In the next five years, these higher sin taxes will generate a total of P137.2 billion in additional revenues.
The government needs about P258 billion for Universal Health Care in 2020, and “sin” taxes are among its major sources of funding. —BEN O. DE VERA