Finance Secretary Carlos G. Dominguez lauded the Congress for passing President Rodrigo Duterte’s measure imposing higher sin taxes on alcohol, heated tobacco and vapor products.
With its estimated P137.2 billion in revenues over the next five-years, the reconciled version of the new sin tax law will augment funding for the universal health care (UHC) program of the national government.
Aside from UHC, the ratified measure would also help deter binge drinking and the use of harmful vaping and heated tobacco products (HTPs), especially among the youth and low-income consumers who are most sensitive to price increases.
“We thank the Senate and the House of Representatives for ratifying the bill, which is an investment in the future of our people, and will help President Duterte deliver on his administration’s goal of providing a safe, comfortable, and healthy life for every law-abiding Filipino,” Dominguez said.
The finance chief also recognized Senate and House Ways and Means Committee Chairpersons Pia Cayetano and Joey Salceda for “painstakingly studying the measure and holding extensive consultations with concerned stakeholders,”
Dominguez added that Cayetano and Salceda’s efforts led to the swift approval of the bill in their respective chambers, and demonstrated their strong advocacy to push for better health care for Filipinos.
The ratification of the sin tax law before the Congress adjourned for the holidays has given President Duterte enough time to review the measure and sign it into law, in time for its implementation on January 1, 2020.
To recall, the chief executive certified the Senate bill of the sin tax reform measure as urgent after the House approved its version last August.
Under the reconciled bill, 60 percent of revenues collected from the excise taxes on alcohol products and e-cigarettes will go to the UHC, while 20 percent will be spent for medical assistance and health facilities.
The remaining 20 percent will go to programs that will help the government fulfill its commitments under the United Nations’ Sustainable Development Goals (SDGs).
Once President Duterte signed the bill into law, it will immediately usher in the new sin tax regime on the first day of 2020.
For fermented liquors, a specific tax of P35 per liter will be imposed this coming January 1, which will subsequently increase by P2 per liter per year until it reaches P43 per liter in 2024. Thereafter, the rate will increase by 6 percent every year.
Distilled spirits will be taxed with a 22 percent ad valorem tax on top of a specific tax of P42 per proof liter in 2020, which will increase to P47 per proof liter in 2021, P52 per proof liter in 2022, P59 per proof liter in 2023 and P66 per proof liter in 2024. Thereafter, the rate will increase by 6 percent every year.
Alcopops will be taxed at the same rates as distilled spirits.
For wines, both still and sparkling, the specific tax is at P50 per liter in 2020, and will increase by 6 percent yearly thereafter.
HTPs will be taxed with new rates of P25 per pack in 2020, P27.50 in 2021, P30 in 2022, P32.50 in 2023, and 5 percent yearly thereafter.
A tax of P45 per 10 milliliters of conventional freebase vapor products will be imposed in 2020, P50 in 2021, P55 in 2022, P60 in 2023. Thereafter, the rate will increase by 5 percent every year.
For salt nicotine vapor products, the tax of P37 per millimeter will be imposed on the first year, and additional P5 per ml per year until the rate reaches P52 per ml in 2024. Thereafter, the tax will be increased by 5 percent every year.
This article was published in Manila Bulletin on December 25, 2019.
More on TaxReform News
Dominguez to US businesses: Now is best time to invest in ‘Asia’s next powerhouse’ →Date Posted: April 22, 2019
WASHINGTON DC—Finance Secretary Carlos Dominguez III has told leaders of the American business community that … Continue reading Dominguez to US businesses: Now is best time to invest in ‘Asia’s next powerhouse’
DOF thanks Congress for approving ‘sin’ tax reform bill →Date Posted: June 5, 2019
Finance Secretary Carlos Dominguez III has thanked the Senate and the House of Representatives for … Continue reading DOF thanks Congress for approving ‘sin’ tax reform bill
Tax reforms to net P206.8-B in 1st year of implementation →Date Posted: January 19, 2017
The Duterte administration needs to raise some P366 billion a year over the medium term, … Continue reading Tax reforms to net P206.8-B in 1st year of implementation
DOF to urge Congress to pass higher tobacco tax rates to further discourage smoking, raise more healthcare fundsDate Posted: April 29, 2019
The Department of Finance (DOF) will “try its best” until the last minute to convince the Congress to impose new “sin” tax rates on tobacco products that will make cigarettes pricey enough to further discourage smoking, especially among teenagers.