Mighty deal boosted ‘sin’ tax take in ’17

The excise tax take from cigarettes and alcohol rose 29 percent to a record P186.6 billion in 2017 after the government collected unpaid dues from a homegrown tobacco firm that used fake tax stamps.

Citing data from the Bureau of Internal Revenue’s (BIR) large taxpayers’ service, Internal Revenue Commissioner Caesar R. Dulay told the Inquirer on Thursday that collections from cigarettes last year amounted to P125.8 billion, while those from alcohol reached P60.8 billion.

The combined sin taxes collected in 2017 exceeded the P144.2 billion in 2016, BIR data showed.

Under Republic Act No. 10351 or the Sin Tax Reform Law of 2012, tobacco products were taxed a higher unitary rate of P30 per pack starting last Jan. 1, 2017, following a two-tiered system in 2016. For alcohol products, the excise tax also rose to a unitary rate of P23 per liter last year.

As a result, the growth in sin tax collections last year also outpaced the mere 1.7-percent increase in 2016, 25.7 percent in 2015, and 9.1 percent in 2014, BIR data showed.

Notably, the figure provided by Dulay showed a 33-percent jump from 2016’s P94.5-billion collection from the sale of cigarette products.

The growth in 2017 reversed the 5.5-percent decline in 2016, which was partly attributed to the proliferation of fake tax stamps and smuggled products.

Last year, the government caught Mighty Corp. affixing counterfeit cigarette tax stamps on its products. Nearly 120 million packs of Mighty cigarettes had been found bearing fake stamps to evade excise tax payments.

The government subsequently filed against Mighty three tax evasion cases worth P38 billion. The cases were dropped after the firm agreed to settle by selling P46.8 billion of its assets to global tobacco giant Japan Tobacco International.

JTI agreed to pay the government P30 billion—P25 billion for the settlement and a P5-billion value-added tax—until April this year.