House panel okays increase in alcohol, tobacco taxes

Alcohol and tobacco products will soon be slapped with higher taxes after the House committee on ways and means approved Wednesday the Malacañang-backed proposal. With a vote of 46-14, House Bill 5727 authored by Cavite Representative Joseph Emilio Abaya, an ally of President Benigno Aquino III, was approved with amendments proposed by the Department of Finance (DOF) on alcohol products. Have something to report?

Tell us in text, photos or videos. As a result, the expected yearly revenue from the proposed increase of sin taxes will only reach P33 billion instead of the original target of P60 billion. This developed after Abaya said the committee “did away with the 45 percent proof on alcohol as basis” and shifted to net retail price. "These amendments were proposed because we recognize the concern of all sectors and we want to be responsive to the industries (which will be affected)," Finance Undersecretary Jeremias Paul said in an interview. Overall, the measure eyes to bring in an additional P400 billion in revenues to the government during the remaining four years of the Aquino administration. With this development, presidential spokesperson Edwin Lacierda is hoping that the measure will be easily approved in the plenary.

 “The initiatives to reform the excise tax system started 15 years ago and it is only under this administration, with the President’s firm leadership, that such a legislative measure has been approved,” he said. Money that will be drawn from the tax measure will be used to improve public healthcare and welfare of tobacco growers, Lacierda said, as well as strengthen the current tax structure, and sustain revenue growth. "These reforms will enable us to increase the cost of tobacco and alcohol addiction while at the same time providing government with additional resources to respond to the public costs of these vices. The restructuring of the tax system will also create a more level playing field in the tobacco market as well as enable us to comply with our WTO (World Trade Organization) commitments," Finance Secretary Cesar Purisima said in a separate statement. The bill was considered a priority during the second Legislative-Executive Development and Advisory Council (Ledac) last year, thus the Palace saw no need to expedite its passage by certifying it as urgent. 

The second regular session of the 15th Congress will adjourn on June 6. Meanwhile, if Congress approves the bill, distilled spirits with a net retail price of less than P90 will be taxed with P25. This means that by 2013, prices of alcohol products like whiskey, brandy, rum, gin and vodka will increase to P115. The tax rate for distilled spirits with net retail prices ranging between P90 to P150 will be P80 while distilled spirits which cost above P150 will be taxed with P320. Tax rates for wines with net retail prices of P500 or less will be P250; and P700 for those that cost more than P500. For fermented liquor (beer, lager beer, ale, porter), if the cost is P50.60, taxes will be P15.49. If the cost is higher than P50.60, then the tax rate will be P20.57. The existing tax rate for fermented liquor is only P10.41. On the other hand, cigarettes that cost P11.50 or less will soon be sold for P23.50, while cigarettes that cost P11.50 and above will be sold for P31.80.