DoF projects P61.3B in collections from higher sin taxes in 2020

THE DEPARTMENT of Finance (DoF) said that the government may raise an additional P61.3 billion worth of revenue in the second round of increased “sin” taxes proposed under its comprehensive tax reform program.
“For 2020, estimated revenues from cigarettes and alcohol are P61.3 billion, and by 2021, P77.6 billion and increasing for the future,” Finance Assistant Secretary Antonio Joselito G. Lambino II told reporters last week.
Higher excise tax rates for alcohol and tobacco products are part of the government’s comprehensive tax reform package under “Package 2+.”
The DoF seeks to gradually raise excise tax rates for alcohol and tobacco beginning 2020 and until 2023, according to Mr. Lambino.
The DoF proposes to increase the ad valorem tax on distilled spirits to 25% from the current 20%, and increase its specific tax to P40 per proof liter in 2020 from the current P20 per proof liter, and hiking it gradually until P55 by 2023.
For sparkling wine selling for less than P500, the DoF proposed to raise the excise tax to P334.59 per 750 ml bottle in 2020, from P250 currently, further increasing annually to P445.33 by 2023
Sparkling wine selling for P500 or above meanwhile will be taxed P936.92 per 750 ml., with annual increases bringing it to P1,247 by 2023, from P700 currently.
Still and carbonated wines below 14% alcohol content will carry an excise tax of P40.15 in 2020, rising to P53.45 by 2023, from P30 currently.
Wines above 14% but below 25% alcohol content on the other hand will be taxed P80.31 in 2020, and rising to P106.89 by 2023, from P60 currently.
Still and carbonated wines with alcohol content above 25% meanwhile will be taxed at the same rate as distilled spirits.
The DoF also wants a wants a P40 excise tax per liter on fermented liquors in 2020, rising to P55 in 2023, from P23.5 per liter currently.
For tobacco products, the DoF said it will support Senator Emmanuel D. Pacquiao’s bill that seeks to increase the excise tax to P60 per pack from P35 currently, along with an annual increase of 9%, from the current 4% increase in excise tax per year.
Under the Tax Reform for Acceleration and Inclusion law, the tobacco excise tax will rise to P40 per pack by 2022.
The DoF earlier reported that taxes collected from tobacco and alcohol products hit P112.46 billion in the first six months of the year, up 41.38% from a year earlier and beating the P77.54 billion target by 45.03%.
The tax package also includes the comprehensive mining reform act that will harmonize the mining sector’s fiscal regime, while imposing royalties on all mining operations. — Elijah Joseph C. Tubayan