Bitter mix: Liquor bans, ECQ bring sin taxes down by nearly 100 percent

Amid a liquor ban in many areas and restricted deliveries of cigarettes during the enhanced community quarantine (ECQ), the government collected only about P200 million in sin taxes from tobacco and alcohol products in April.

At an online forum on Wednesday, Finance Undersecretary Gil S. Beltran said excise collections from cigarettes and alcoholic drinks dropped by 99.1 percent last April from P18.1 billion in 2019.

Besides the ban on sale and purchase of alcoholic beverages and reduction in domestic cigarette production during the ECQ, Beltran also noted that consumer demand for non-essential goods like these sin products had been tempered by the lockdown.

In April, cigarette removals slid 99.2 percent to just three million packs from 355.5 million a year ago.

The volume of fermented liquors brought out of factories dropped 99.9 percent to 0.2 million liters from 174.2 million liters last year, while the volume of distilled spirits skidded 95.7 percent to 1.4 million proof liters from 32.5 million.

Total sin tax collections from January to April declined 57.1 percent to P30.6 billion from P71.2 billion during the first four months of 2019, despite higher excise rates slapped on both cigarettes and alcoholic drinks effective Jan. 1 this year.

Given expectations of weak demand for the rest of the year, the Cabinet-level Development Budget Coordination Committee (DBCC) slashed this year’s target incremental revenues from the new laws imposing additional excise on cigarettes, e-cigarettes and alcohol to P13.2 billion from P37.1 billion previously.

The 2021 target of P46.9 billion was cut to P28.1 billion and 2022’s target of P53.3 billion was cut to P31.7 billion.

Total three-year incremental revenues from the latest sin tax rates were cut by nearly half to P73.1 billion from previous estimate of P137.3 billion.

Edited by TSB