JUNE 19, 2012 DATE

NR # 2775
REF. NO.

Solons file new sin tax reform bill

Three lawmakers have filed a new proposal to shift to a unitary excise tax system for alcohol and tobacco products to provide them with a fair tax treatment, discourage smoking and earmark additional revenues for health-related programs of the government. The proposal embodied in House Bill 6188, which is principally authored by Rep. Eulogio Amang Magsaysay (Party-list, AVE) and co-authored by Reps. Romeo Jalojos, Jr. (2nd District, Zamboanga Sibugay) and Seth Frederick Jalosjos (1st District, Zamboanga del Norte), was filed just a few weeks before the House passed on third and final reading House Bill 5727 which provides a shift to a twotier excise tax system for tobacco products and three-tier for alcohol products from the current multi-tier. This bill intends to promote the health of the people by discouraging tobacco use. Thus, it moves to a simple tax structure by adopting a unitary rate so that alcohol and tobacco products will have a fair tax treatment. This will also provide a mechanism to increase revenues as it averts the shifting of demand to the least-taxed brand of tobacco and alcohol products. Thus, while allowing the indexation of taxes to inflation, it also earmarks additional revenues for health-related concerns including the Universal Health Care Program. Likewise, it earmarks incremental revenues to provide alternative livelihood programs for tobacco farmers, said Magsaysay. He said the Philippine Development Plan for 2011-2016 cites the need for tax reforms to improve the revenue take of the tax system while promoting equity and a level playing field for all stakeholders. Specifically, it gives emphasis to adjustments in the excise tax on alcohol and tobacco products. With this in mind, all stakeholders must converge on how to meet these ends especially with the evergrowing socio-economic demands and budget deficit, said Magsaysay. He cited the Department of Budget of Management earlier said the emerging the budget deficit last year was P191.6 billion, and reiterated the plan to raise revenue to P1.56 trillion this year and boost spending to P1.84 trillion. Meanwhile, the National Economic Development Authority projects the economy probably grew 3.6 percent to 4 percent in 2011 according to him. While it is true the current ventures of the government through the public-private partnerships (PPP) is innovative and pro-active, other channels must also be explored to further increase resources, improve fiscal position and implement programs to attain inclusive growth, said Magsaysay. On the health side, he said the Department of Health cited 80,000 Filipinos die each year from tobacco-related diseases, while the Health Justice Philippines put the figure at 35,000. With over 17 million smokers, the Philippines has one of the highest smoking prevalence in the world. Local medical experts underscored the rise in incidence of non-communicable diseases (NCDs) such as cancer and heart disease, with more than 200,000 deaths annually. Cigarette smoking and tobacco use were identified as the single largest factor contributing to NCDs, Magsaysay said. He also cited a study of the Action for Economic Reforms (AER) that showed in the Philippines, cigarette excise tax as percentage of gross retail price (GRP) ranges from 14 percent to 42 percent based on 2010 cigarette prices, which is below the World Health Organizations recommended rate of at least 70 percent of the GRP.

JUNE 19, 2012 DATE

NR # 2775
REF. NO.

The bill provides that on distilled spirits there shall be collected, subject to the provisions of Section 133 of the National Internal Revenue Code, excise taxes in accordance with alcohol content. For 45 percent by volume and less, by January 1, 2012, P42.00 per proof liter; and January 1, 2014, P150.00 per proof liter. For more than 45 percent alcohol by volume, by January 1, 2012, P317.45 per proof liter; January 1, 2013, P233.73 per proof liter; and January 1, 2014, P150.00 per proof liter. On wines, there shall be collected per liter of volume capacity, the following tax rates effective January 1, 2012. For sparkling wines/champagnes regardless of proof, P300.00; and still wines regardless of proof, P50.00. Fortified wines containing more than 25 percent of alcohol by volume shall be taxed as distilled spirits. On fermented liquor, there shall be levied, assessed and collected on beer, lager beer, ale, porter and other fermented liquors except tuba, basi, tapuy and similar fermented liquors an excise tax equivalent to P25.00 per liter effective January 1, 2012. On tobacco products, there shall be collected a tax of P2.50 on each kilogram of the following products of tobacco: Tobacco twisted by hand or reduced into a condition to be consumed in any manner other than the ordinary mode of drying and curing; Tobacco prepared or partially prepared with or without the use of any machine or instruments or without being pressed or sweetened except as otherwise provided; and fine-cut shorts and refuse, scraps clippings, cutting, stems and sweepings of tobacco except as otherwise provided. On tobacco specially prepared for chewing so as to be unsuitable for use in any other manner, effective January 1, 2012, it will be P1.87on each kilogram; provided that on January 1, 2013 and every year thereafter, the excise tax rates prescribed shall be adjusted annually to their present value using an appropriate price index for tobacco products as published by the NSO. On cigars and cigarettes, there shall be levied, assessed and collected a tax of P200.00 per cigar. Provided that on January 1, 2013 and every year thereafter, the excise tax rate prescribed shall be adjusted annually to its present value using an appropriate price index as published by the NSO. On cigarettes packed by hand, the tax rates shall be: Effective January 1, 2012, P14.00 per pack; Effective January 1, 2013, P22.00 per pack; and Effective January 1, 2014, P30.00 per pack; provided that on January 1, 2015 and every year thereafter, the excise tax rate prescribed shall be adjusted annually to its present value using an appropriate price index for tobacco products as published by the NSO. On cigarettes packed by machine, the tax rates effective January 1, 2012 shall be: P14.00 per pack if the net retail price is P10.00 and below per pack; and P30.00 per pack if the net retail price is more than P10.00 per pack. Effective January 1, 2013, the tax rates shall be: P22 per pack if the net retail price is P10.00 and below per pack; and P30.00 per pack if the net retail price is more than P10.00 per pack. Effective January 1, 2014, the tax shall be P30.00 per pack; provided that on January 1, 2015 and every year thereafter, the prescribed excise tax rate shall be adjusted annually to its present value using an appropriate price index for tobacco products as published by the NSO. (30) rbb