Distillers complain of unfair taxation compared to wine
DISTILLERS said the uneven taxation of alcoholic beverages puts them at a disadvantage to the wine industry and called for a “level playing field” as the next round of tax reforms make their way through Congress.
In a statement over the weekend, the Distilled Spirits Association of the Philippines (DSAP) said it “supports” the proposal to increase the excise tax on alcoholic products but is seeking fair treatment relative to other segments of the industry.
“We’re currently applying a progressive tax structure for distilled spirits. There’s no reason it can’t be done across categories in the alcohol sector/industry. We just need to look for the right balance,” DSAP President Olivia Limpe-Aw was quoted as saying.
House Bill 1026, written by Albay-2nd district Rep. Jose Ma. Clemente S. Salceda hurdled third and final reading on Aug. 20.
Meanwhile, Senate Bill No. 383, incorporating drafts put forward by the Department of Finance (DoF) and the Department of Health (DoH), has been filed by Senator Emmanuel D. Pacquiao.
Ms. Limpe-Aw, who is also the president and CEO of Destileria Limtuaco, Inc., said the DoF-DoH proposal “unfairly penalizes low- income consumers.”
She said wines will have an excise tax of P40 per liter while a bottle of gin sold for P94 will be taxed P32.66.
“Let’s compare: Ginebra San Miguel Gin will be sold at P94 a bottle under this proposed tax, so the tax is P32.66 or a tax burden of 34.74%. The most expensive wine — P600,000 — the tax is only P30/bottle, or a tax burden of 0.005%,” Ms. Limpe-Aw said.
Under the Senate bill, distilled spirits will have 25% ad valorem tax on the net retail price and another P40 specific tax per liter, which will gradually increase by P5 annually up to P55 in 2023, and then further rise by 10% yearly thereafter.
Meanwhile, the excise tax on wine will increase to P40 per liter next year for those containing 14% alcohol by volume and P80 for more than 14%, with an incremental annual increase of 10% starting 2021. There is no ad valorem tax in the bill.
She also added that even high-end distilled brands will have to pay higher excise tax when compared to wine.
“Let’s use P20,000/750 ml bottle as our base price to compare taxes: the tax per bottle for this distilled spirit is P2,996.91. That’s still more than 100 times compared to the P30 tax on a P20,000/bottle wine,” she said.
On the other hand, the wine industry said at a Senate hearing last week that the bill should not impose ad valorem tax on wine as it is the “healthier alternative.”
The bill also proposes a higher excise tax on sparkling wines and fermented liquor.
The excise tax on sparkling wine will include a P335 specific tax on bottles worth P500 or less and P937 for those worth more than P500. Next year, the taxes will be P328.99 and P921.15, respectively.
Meanwhile, fermented liquor excise taxes will rise from P40 next year to P45 in 2021, P50 in 2022 and P55 in 2023. Another 10% increase will be imposed every year thereafter. — Beatrice M. Laforga