Package 2+ : Sin Taxes

Package 2+ of the Comprehensive Tax Reform Program includes proposed reforms on mining and sin taxes. Both proposals are to complement the enacted TRAIN law to generate additional revenues, make the tax system simpler, fairer, and more efficient, and align with President Duterte’s priority programs on social and environmental protection.

The Department of Health and DOF jointly proposes to increase the excise taxes on tobacco and alcohol products to:

  • Ensure financial sustainability for health expenditure programs under the Universal Health Care law with the following targets:
      • Sustain 100% Philhealth coverage
      • Provide adequate out-patient check-ups and medicines
  • Discourage excessive alcohol and tobacco consumption for better health and social outcomes, especially among the youth and poor with the following targets:
      • Attain smoking prevalence of 15%
      • Avert more than 0.5 million smoking-related deaths
      • Achieve 10% reduction in harmful alcohol consumption
  • Ensure a world class workforce

 

Legislative status

House of Representatives Senate
Alcohol HB 8618 was approved on 3rd and final reading last December 3, 2018. It proposes to increase the specific tax to P30 per proof liter with an indexation of 7% effective 2023, and ad valorem tax of 22%. The joint DOH-DOF proposal was adopted by Sen. Pacquiao  under Senate Bill (SB) 2197.

One public hearing was conducted by the Senate Ways and Means Committee.

Tobacco HB 8677 was approved on 3rd and final reading last December 3, 2018. The approved House version proposes to increase the unitary tax rate to P37.5 per pack then an additional P2.5 from 2020 to 2022. For the succeeding years, the proposed increase is still 4 percent. There are three proposals being deliberated in the Senate. These are the following:

  • SB 1599 of Sen. Pacquiao, which is similar to the  joint DOH-DOF proposal of P60 per pack with 9% annual indexation, and was certified as urgent by President Duterte.
  • SB 1605 filed by Sen. Ejercito proposes P90 per pack with 9 percent indexation, and
  • SB 2177 of Sen. Gatchalian, which proposes P70 per pack with 9% indexation.

Two public hearings were conducted by the Senate Ways and Means Committee since January.

In a unanimous vote, the bill was approved one the third and final reading on 3 June 2019.

Salient features

On tobacco products

Increase the unitary excise tax rate of cigarettes to P60 per pack of 20 sticks effective 2019 then a 9% increase every year thereafter.

Increase the excise tax rate of other tobacco products to 10% from 2019 onwards to account for inflation and increase in income.

Include a provision on plain packaging and banning the sale of loose cigarettes or sale per stick.

The DOH-DOF proposal is expected to avert an approximate of 713,000 deaths and an estimated number of quitters in adults (2018-2022). This will also bring down smoking prevalence to 16.8%.

On alcohol products

For fermented liquor (e.g. beer), unitary excise tax increase to P40 per liter effective 2019. An additional P5 per liter shall be imposed from 2020 to 2022 then a 10% increase every year thereafter.

For distilled spirits (e.g. gin, brandy, vodka, whiskey, rum, and tequila) increase the specific excise tax rate to P40 per proof liter effective 2019, followed by an additional P5 per proof liter from 2020 to 2022. From 2023 onwards, it will be an additional 10%. For the ad valorem rate it is proposed at 25% from 2019 onwards.

For wines, increase the specific tax rate by 10% every year thereafter starting 2019.

Publications

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HB 7994 (Mining) Download File
Date Posted: April 23, 2019
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