Senate to debate sin tax bill that slashes by half tax for imported spirits
Sen. Ralph Recto. INQUIRER FILE PHOTO
MANILA, Philippines—A panel in the Senate has endorsed for plenary debates its own version of “sin tax” bill, which would cut by half the tax being imposed on imported “distilled spirits” but impose as high as 121 percent additional tax on low-priced cigarettes.
On Wednesday, Senator Ralph Recto, chairman of the Senate committee on ways and means, sponsored Committee Report No. 111, which consolidated various bills that seek to restructure the excise tax on alcohol and tobacco.
“In taxing distilled spirits, we are introducing new rates that will be WTO [World Trade Organization]-compliant and please the trading gods,” Recto said.
“In the first year of the new law’s implementation, we are proposing to immediately slash by half the tax rate slapped on imported distilled spirits to stop Western ranting against unfair taxes,” he said.
“Distilled spirits” is defined in the Committee Report as the substance known as ethyl alcohol, ethanol or spirits of wine, including all dilutions, purifications and mixtures thereof, from whatever source and by whatever process produced, including whisky, brandy, rum, gin, vodka and other similar products or mixtures.
“The classification of distilled spirits, however, will remain in the first two years but the excise tax rates of those currently paying P14.68 per proof liter shall be increased to P20—representing a 36 percent hike—on local spirits,” Recto said.
As imported and local distilled spirits compete for their share of the market, he said it should not be surprising to find them cozying up in one bed together either in the low-priced or mid-priced range.
Distilled spirits with net retail price less than P90 will have a P20 tax; those priced between P90 and P150 will have an P80 tax; those between P150 and P250 will be slapped with P160 tax; and those with net retail price of more than P250 would be taxed P320.
For wine, a P250 tax will be imposed on those with net retail price of not more than P500, and P700 for those whose net retail price is more than P500.
Carbonated wines, Recto said, would also be included in the excise tax net, along with still wines.
“The tax on these wines will be increased by 36 percent for the first year,” he said.
For distilled spirits, Recto projected an incremental revenue of P1.38 billion in excise taxes alone in the first year of implementation of the law.
Meanwhile, a P13.75 tax will be imposed on beer products whose net retail price is not more than P50.60 while those priced higher than P50.60 would get be taxed P18.80.
The tax on beer brewed and sold in micro-breweries will be increased by 36 percent, from P20.57 to P28 per liter. The tax rates will be increased every two years.
For tobacco, a 121-percent tax rate increase will be imposed on low-priced cigarettes—from P2.72 to P6 per pack of 20 sticks; a 32-percent rise for mid-priced cigarettes—from P7.56 to a P10; and a 17-percent increase for high-priced cigarettes—from P12 to P14.
Cigarettes with a net retail price of less than P15 will be taxed P7.50; a P10.50 tax for those priced between P15 and P18; and 14.50 tax for those priced (excluding taxes) at more than P18.
Recto said the projected incremental revenue from both alcohol and tobacco will be P15 billion in the first year.
