Finance department asks Senate to adopt House alcohol tax version
By Charmaine A. Tadalan
Reporter
THE DEPARTMENT of Finance (DoF) on Monday appealed to the Senate to just adopt the House of Representatives’ bill raising excise tax rates on alcohol products in a last-minute bid to bag approval in the five session days left for the 17th Congress, but leaders of the chamber were either noncommittal or cold to the idea.
The same day saw Senator Juan Edgardo M. Angara, who heads the Senate’s Ways and Means committee, submitting for plenary action the panel’s proposed increase in excise tax rate for tobacco products to P45-60 per pack by 2023 from the current P35/pack under Committee Report No. 714.
“Well, the alcohol (excise tax rate hike) was already passed in the House. All they (senators) have to do is adopt the House version, just like the House is considering adopting the Senate version for the tobacco,” Finance Secretary Carlos G. Dominguez III told reporters following a hearing of the Senate Committee on Finance that deals with budget matters.
Asked whether the chamber has decided on the Finance department’s appeal on the excise tax hike for alcohol products, Senate President Vicente C. Sotto III said in a mobile phone message: “none yet,” while Senate President Pro Tempore Ralph G. Recto said in a separate text message “that can’t be done. It must be heard by com[mittee].”
The House approved on final reading House Bill No. 8618 in December last year; while Senate Bill No. 2179, which adopted the DoF and the Department of Health’s proposal, awaits approval at the committee level in that chamber.
The 17th Congress ends its third and final regular session on June 7. All unfinished bills that fail to hurdle Congress by then will have to be refiled in the 18th Congress, which opens on July 22.
The HB 8618 proposed to increase the ad valorem tax on the net retail price (NRP) per proof for distilled spirits to 22% from 20% currently, and the specific tax rate to P30 per liter from P23.40/liter in 2019. The specific tax rate will then increase by P5 every year, until it reaches P45 in 2022, and then will rise by seven percent per year thereafter.
SB 2179, meanwhile, proposed to increase the ad valorem tax on NRP per proof for distilled spirits to 25% and the specific tax rate to P40 per proof liter in 2019. An additional P5 per liter will be imposed from 2020 to 2022 then a 10% increase every year thereafter.
The DoF said on Nov. 20 the House version is expected to generate P7.8 billion in revenues in the first year of implementation, lower than the estimated P32.3 billion revenues under SB 2179 that was authored by Senator Emmanuel D. Pacquiao.
The Finance department is pushing increases in both excise taxes in a bid to help plug a funding gap of about P400 billion for the implementation of Republic Act No. 11223, or the Universal Health Care Act (UHC).
“We hope that in these last give session days, this bill can be passed because we need the funds for the UHC program. Estimated expenditure for the next five years is P1.4 trillion, the amount that we have right now is P1 trillion, so we’re going to be short roughly P400 billion,” he also said.
Also on Monday, Mr. Angara sponsored for plenary discussion the proposed measure increasing excise tax on cigarettes to P45-60/pack by 2023 from the current P35/pack; and by five percent every year thereafter.
“We’re legislating not so much a single sweet spot, but a ladder where we hope all stakeholders involved can make a smooth transition,” Mr. Angara said in his sponsorship speech on Monday.
“In essence, we’re providing up to four years of graduated increases so that more of our tobacco farmers can shift crops; the tobacco companies can recast their financial projections; and the DoH can catch up with its underspending.”
The DoF said the Senate Bill is expected to generate P15 billion in the first year of implementation, lower than its proposal to immediately increase the tax to P60/pack, estimated to bring around P30.1 billion revenues.
Tobacco firms are already dealing with a tax hike under Republic Act No. 10963, which among others increased the excise tax rate to P32.50/pack from P30/pack in January last year and raised it further to P35/pack in July. It is scheduled to go up to P37.50/pack in January next year.
