By Charmaine A. Tadalan
THE MEASURE that will further increase the excise tax on alcohol products, as well as on electronic cigarettes and vapor products is closing in on enactment as a bicameral conference committee convenes today to harmonize the versions of the House of Representatives and of the Senate, officials of both chambers said on Tuesday.
House Ways and Means committee Chairman Jose Ma. Clemente S. Salceda of Albay’s second district said in a mobile phone message on Tuesday that the panel convenes “tomorrow,” while Senate President Pro Tempore Ralph G. Recto in a separate text message said the bicameral meeting “has to be tom(orrow), so we can ratify tom(orrow) night.”
Congress will take its Christmas-New Year break on Dec. 21, 2019-Jan. 19, 2020.
The Senate late Monday evening approved Senate Bill No. 1074 on second and then third reading in succession, with 20 affirmative votes, zero negative votes and no abstentions, after President Rodrigo R. Duterte certified it as an urgent measure — doing away with the required three-day interval between second- and third-reading approval.
The bill, however, contained rates lower than what Senator Pia S. Cayetano, who chairs the Senate Ways and Means committee, had initially proposed after Mr. Recto’s intervention. “We have agreed with the sponsor on 90% of the amendments we will be proposing. It was a give and take with the exception of just a few others,” Mr. Recto said during Monday evening’s period of interpellation.
Based on estimates of the Department of Finance (DoF), the approved version will generate P24.7-billion revenues in the first year of implementation, down from P47.9 billion in the initial proposal.
The final version of the bill will increase the specific tax imposed on distilled spirits to P26 in 2020 from P23.40 currently, then to P30 in 2021, P33 in 2022, P37 in 2023, and P41 in 2024.
That will be on top of a 50% ad valorem tax based on these products’ net retail price.
This is much lower than the initially proposed P90-120 specific tax, but higher than the current 20% ad valorem tax on distilled spirits retained in the Cayetano version.
Moreover, the approved bill will tax alcopops, or flavored alcoholic beverages, as distilled spirits instead of fermented liquor.
The Senate also adopted the Recto amendment to impose a single rate of P50 per liter in 2020 on all types of wine. He had argued that the wine industry makes up just one percent of the alcoholic drinks market.
Rates on wines currently vary according to type, price, and alcohol content. Sparkling wines costing up to P500 and those costing more than P500 are levied P316.33 and P885.72, respectively. Still wines and carbonated wines are charged P37.96 for bottles with up to 14% alcohol content and P75.92 for products containing more than 14%.
The bill that initially passed by the Senate’s Ways and Means committee sought to increase rates on sparkling wines to P600 per liter, as well as to P43 per liter for still wines and carbonated wines in the first year of implementation.
Fermented liquor will be levied P35 in 2020, with the rate increasing by P2 until it reaches P43 in 2024. These proposals are lower than the P45-P75 rates in the Cayetano version. Fermented liquors are currently levied P25.42 per liter.
The same measure will amend Republic Act No. 11346, which will raise the excise tax on tobacco products to P45 per pack beginning 2020 from P35 currently. The rate increases by P5 annually thereafter until it reaches P60 per pack in 2023.
The law also introduced a P10 per pack rate on heated tobacco products (HTPs) in 2020; and a P10 rate for 10 milliliter vapor products, P20 for 20 ml, P30 for 30 ml, P40 for 40 ml, P50 for 50 ml and so on.
Mr. Recto proposed to impose rates that are half those levied on conventional cigarettes, while Ms. Cayetano recommended the same rate as those on cigarettes.
“My position is that heated tobacco and vape is less harmful than a conventional cigarette,” Mr. Recto said.
The Senate on Monday approved P22.50 per pack of HTP in 2020, P25 in 2021, P27.50 in 2022, and P30 in 2023.
It will also increase rates on vapor products to P45 per 10 milliliter in January, whether nicotine salts or classic nicotine is used. The rate will then increase by P5 per year until it reaches P60 in 2023.
Speaking to reporters in Davao City, Finance Secretary Carlos G. Dominguez III noted that “[t]he original proposal for the alcohol and e-cigarettes by the DoF was to raise P36.5 billion next year, and increase it over time.”
“I don’t know what the final version was, but I’ll certainly take a look at it. I hope it’s closer to that than to the House version which was only P18 billion.”
He also pushed for enforcement starting Jan. 1 next year.
“I had meetings with the Senate and told them… especially since our tax year follows the calendar year, it’s better to start it on Jan. 1,” Mr. Dominguez said.
“It’s very difficult to do the taxes sometime after Jan. 1, so it’s better to do it and I’m very glad that we’re moving quickly ahead on that.”
The measure forms part of the administration’s comprehensive tax reform program, alongside measures that seek to reduce corporate income tax and overhaul fiscal incentives, provide a uniform real property valuation and assessment system, and simplify the tax structure for financial investments.
All said measures were mentioned by Mr. Duterte in his fourth State of the Nation Address on July 22.
Besides RA 11346, the government has so far also passed RA 10963, which slashed personal income tax rates and increased or added levies on several goods and services, and RA 11213, which grants estate tax amnesty and amnesty on delinquent accounts left unpaid even after being given final assessment. — with Beatrice M. Laforga