THE Department of Finance (DoF) projects tax collection from so-called “sin” products to jump over 20% to P332.3 billion this year, following another round of excise tax hikes on alcohol and tobacco products.
At the same time, the DoF warned of a potential revenue loss of P5.2 billion from the recently signed law’s tax exemption provision.
In a statement on Friday, Finance Undersecretary Karl Kendrick T. Chua said government’s tax take from sin products is expected to increase since it now includes electronic cigarettes such as heated tobacco products and vaping products.
“In 2015, the total revenues from ‘sin’ products was P143.5 billion. Last year, in 2019, the total was P269.1 billion or 87.5% more. Starting 2020, ‘sin’ taxes now include the collection of excise taxes on tobacco, alcohol, sweetened beverage and e-cigarette products,” Mr. Chua said in a report to Finance Secretary Carlos Dominguez III.
He added that the tax collection from sin products could rise to P480 billion by 2024, which is already the DoF’s “low-end projection.”
At the same time, Mr. Chua warned of potential revenue losses from the value-added tax (VAT) exemption provision under Republic Act (RA) No. 11467 which exempted from VAT the sale and importation of all prescription medicines for high cholesterol, diabetes and hypertension.
The tax exemption will also be applied to medicine for mental illness, cancer, kidney diseases and tuberculosis by 2023.
The DoF said they are now studying the revenue impact of the tax exemption but based on their preliminary assessments, the government might lose P5.2 billion in the first year of implementation or P35.1 billion in five years or by end-2024.
Signed into law on Jan. 22, RA No. 11467 imposes higher excise tax on e-cigarettes, vapor and alcoholic drink products, and is expected to generate an initial P22.2 billion in revenues this year and a total of P137.2 billion from 2020 to 2024.
“With this (VAT-exemption provision), the net incremental revenue of the bill is P17.1 billion in 2020, and a total of P102.1 billion by 2024,” the DoF said.
Under RA No. 11467, 60% of the revenues from the excise taxes on alcohol products and e-cigarettes will go to the Universal Healthcare (UHC) program. The rest will be used for medical assistance and health facilities and for programs aligned with United Nations (UN) Sustainable Development Goals (SDGs). — B.M.Laforga