Manila (Philippine Daily Inquirer/ANN) - The government expects additional revenue of P7.6 billion (US$173 million) from the last mandated increases in the excise taxes on alcohol and tobacco, under the Sin Tax Law of 2005, which took effect on Jan. 1.
Finance Undersecretary Gil S. Beltran said in an interview that based on 2009 consumption figures, tobacco products would represent 53 percent of the additional tax take while alcohol will account for the rest.
Based on the government's excise tax collection program for 2011, Beltran said alcohol-based beverages would account for P22.5 billion or lower by 0.4 percent than the P22.6 billion collected in 2010.
Excise tax collection on tobacco products is programmed at P23.6 billion this year, 8.5 percent lower than the P25.8 billion last year.
Beltran said it was observed that companies "frontload" their shipments at the end of the year before a scheduled increase in excise taxes in the coming year. This means that shipments are made in advance to avoid paying higher taxes.
Under Republic Act No. 9334 or the Sin Tax Law passed in 2005, the levy on cigarettes and alcohol vary in rates depending on price classification.
The tax rates rise every two years starting 2005 at varying paces until 2011 when the cumulative increases reach 20 percent.
The law states that the biennial increase for alcohol is 8 percent while that for tobacco is 6 percent.
"The Department of Finance's position is that the sin tax should be harmonized or there should be a single rate," Beltran said. "The current law is so confusing that even the implementers get confused."
He said there should be a new law by 2013, preferably one that simplifies the sin tax scheme and resulting in higher taxes.
Data from the Bureau of Internal Revenue show that in the 10 months to October, collection of excise tax on alcohol reached P17.5 billion or 3.5 percent higher year-on-year.
Also, collection of excise tax on tobacco reached P25.1 billion or 15.7 percent higher.
