Due to ECQ bans, tax collections from ‘sin’ products continue slide in May

MANILA, Philippines – Collections from “sin” taxes continued to slide in May amid the liquor ban and restricted deliveries of cigarettes during the extended COVID-19 quarantine.

Finance Secretary Carlos G. Dominguez III on Monday said that as a result of the COVID-19 lockdown, the government collected P11.9 billion in excise taxes slapped on tobacco and alcohol products last month, a 43-percent drop from P20.9 billion a year ago.

From January to May, the sin tax take declined 39 percent to P63.1 billion from P102.7 billion during the same five-month period last year.

The Department of Finance (DOF) earlier blamed the lower sin tax collections to date to the ban on sale and purchase of alcoholic beverages, the reduction in domestic cigarette production during the enhanced community quarantine (ECQ) imposed in Luzon and other parts of the country since mid-March to contain COVID-19, as well as weaker demand for non-essential goods during the lockdown.

The Cabinet-level Development Budget Coordination Committee (DBCC) earlier slashed this year’s target incremental revenues from the new laws imposing higher excise tax rates on cigarettes, e-cigarettes and alcohol to P13.2 billion from P37.1 billion previously.

The 2021 and 2022 targets were also reduced to P28.1 billion and P31.7 billion, respectively, from P46.9 billion and P53.3 billion.

It did not help that illicit cigarette trade continued during the ECQ.

Last week, the Bureau of Customs (BOC) confiscated P17.4-million worth of fake cigarettes imported from China.

Last month, the BOC and other authorities blocked P55 million in cigarettes from Indonesia about to be smuggled into Sulu.

In Isabela province also in May, P1-billion worth of fake cigarettes and internal revenue stamps were seized by the BOC and the Philippine National Police (PNP), which also “uncovered the counterfeiting of foreign tax stamps indicating that the cigarettes were also being exported to other countries.”

Also in Isabela last May, the BOC, the PNP and the Bureau of Internal Revenue (BIR) intercepted P1.3 billion in assorted counterfeit cigarettes as well as raw tobacco and cigarette-packing equipment.

The BOC’s Port of Zamboanga last month confiscated in the city a total of P24.1-million fake cigarettes imported from Indonesia and Malaysia, on top of cigarette-making machines worth P100 million.