BIR expects P154B in additional revenue from sin tax reform

The Bureau of Internal Revenue expects to collect about P154.6 billion in additional excise tax revenue within four years if the current version of the proposed sin tax reform law is implemented.

According to the Department of Finance, 86 percent of that amount, or P133.2 billion, would come from cigarettes alone.

The projected additional tax take could help the BIR meet its ever-increasing revenue goals, which the agency usually misses despite the year-on-year rise in collections.

Last month, Finance Secretary Cesar V. Purisima said the year-on-year improvement in the government’s tax take, including those collected by the Bureau of Customs, had resulted in double-digit growth in the national revenue collections in the first semester.

Purisima said the Department of Finance wanted to see the passage of the proposed laws on the reform of excise taxes on tobacco and alcohol, and the rationalization of fiscal incentives.

Based on BIR projections, the incremental excise tax revenues would amount to P31.4 billion on the first year of the sin tax reforms’ implementation. This includes P26.9 billion from cigarettes, P1.4 billion from distilled spirits and P3 billion from fermented liquor.

In the second year, incremental revenues would increase to P39 billion.  This includes P34.7 billion from cigarettes, P1.8 billion from distilled spirits and P2.5 billion from fermented liquor.

Incremental excise tax yield was expected to further rise to P42.7 billion in the third year. This includes P36.3 billion from cigarettes, P2.6 billion from distilled spirits and P3.8 billion from fermented liquor.

In the fourth year, additional tax take would ease slightly to P41.5 billion. This includes P35.4 billion from cigarettes, P3 billion from distilled spirits and P3.1 billion from fermented liquor.

Last week, following a hearing conducted by the Senate committee on ways and means, Secretary Ramon A. Carandang said additional revenues from sin taxes would go to the expansion of the basic health care for the poor, including those who have tobacco-related illnesses.

“There are 17.3 million smokers in the Philippines,” Carandang said. “Many of them are from lower-income classes, and cannot afford proper medical treatment when they develop illnesses from smoking.”