THE Senate Ways and Means Committee said it will stand firm on the rates it seeks to impose on alcohol products and electronic cigarettes, which are higher than the proposed rates in the counterpart House legislation, its Chairman said.
Senator Pilar Juliana S. Cayetano said the tax measure has a chance of obtaining approval in the Senate within the year, with the interpellation period set to begin Tuesday.
“I am ready and I will make myself available every day in my effort to get this bill approved as soon as possible,” Ms. Cayetano said in a statement Tuesday.
“I understand that those from the industries and even some of our colleagues find the rates that we are proposing on a high end, but we stand by those rates.”
The Department of Finance (DoF) projects that the current Senate version will generate P47.9 billion in 2020 and a total of P356.9 billion over five years. This is much higher than the P16.3 billion expected revenue in 2020 from the House version, and P108.9 billion within five years.
Senate Bill No. 1074 proposes to increase the specific tax rate on distilled spirits to P90 per proof liter in 2020 from the current P23.40 and retain the ad valorem tax of 20% of the net retail price (NRP). The specific tax rate is set to increase by P10 until it reaches P120 in 2023.
Sparkling wines will be levied P600 per liter, while still wines and carbonated wines will be taxed at P43 per liter in 2020; with both increasing by 10% annually beginning 2021.
Tax imposed on wines currently vary by the net retail price of a bottle or volume of alcohol content. At present, sparkling wines costing P500 or less and those costing more than P500 are levied P316.33 and P885.72, respectively.
Rates on still wines and carbonated wines are currently at P37.96 for bottles with 14% alcohol or less; and P75.92 for those with over 14% alcohol.
The Senate version also proposed to tax fermented liquor with P45 per liter in 2020; P55 in 2021; P65 in 2022; and P75 in 2023; from there, it shall increase by 10% every year starting 2024.
The same rates will be imposed on alcopops, or “pre-mixed alcoholic beverages with alcohol content less than 10% alcohol by volume and which alcohol is from malt or wines or a distillation process.”
In comparison, House Bill No. 1026, approved on Aug. 20, proposed the following rates on distilled spirits: 22% ad valorem tax on NRP; and a specific tax rate of P35 in 2020, which shall increase by P5 every year until 2022; and by 7% annually starting 2023.
An ad valorem tax of 15% on NRP will be introduced on sparkling wines and a P650 specific tax rate with a 7% annual indexation.
Moreover, still wines and carbonated wines with 14% alcohol or less will be charged P40 per liter and P80 per liter for those with more than 14% alcohol; while rates on fermented liquors and alcopops will be increased to P32 per liter in 2020 from the current P25.42.
The same measure will also amend Republic Act No. 11346, which will raise excise tax on tobacco products to P60 per pack by 2023 from the current P35; and introduced a P10 per pack rate on heated tobacco products in 2020.
It also introduced the following rates on vapor products: P10 for 10 milliliter vapor products, P20 for 20 ml, P30 for 30 ml, P40 for 40 ml, P50 for 50 ml and so on.
Both versions proposed to increase the rates on heated tobacco products to P45 per pack beginning 2020, at par with regular tobacco products. This is to increase by P5 annually until 2023.
The Senate version further proposed to increase rates on vapor products to P45 per 10 milliliter in January, be they based with nicotine salts or classic nicotine. The rate is to increase by P5 per year until it reaches P60 in 2023.
The House, meanwhile, proposes to increase rates to P30 per ml in 2020 on vapor products with nicotine salt and only P4.50 per ml in 2020 for products using conventional nicotine.
The proposal forms part of the administration’s comprehensive tax reform program, alongside measures that seek to reduce corporate income tax and streamline redundant fiscal incentives; centralize real property valuation and assessment; and simplify the tax structure for financial investments.
Aside from RA 11346, the government has so far passed Republic Act No. 10963, which slashed personal income tax rates and increased or added levies on several goods and services; and RA 11213, the Tax Amnesty Act, which grants estate tax amnesty and amnesty on delinquent accounts left unpaid even after being given final assessment. — Charmaine A. Tadalan