Palace seeks House approval for sin tax reform bill

Friday, February 3, 2012

MALACAÑANG is eyeing to receive yearly revenues of P60 billion once Congress approves its proposed version of the sin tax reform bill.

Cavite Representative Joseph Emilio Abaya, chairman of the House committee on appropriations, filed House Bill 5727 seeking to change the current multi-rate specific structure of excise taxes on tobacco and alcohol products by adopting a single rate.

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Abaya said the Palace-backed bill--only one among 10 other versions--aims to make the excise tax structure on tobacco and alcohol products simple, fair, and responsive to the objectives of the government.

"The country needs to rely more on its own resources. The bill aims to enhance the revenue-generating potential of the tax system by proposing to restructure the excise taxes on alcohol and tobacco products," he said.

The bill proposes a three-year transition period in unifying the tax rates on cigarettes and distilled spirits. The tax structure for fermented liquor will be immediately unified on the first year if the bill is passed into law.

Revenues from the proposed legislation will augment the government’s funds for its universal health care program.

Section 1 of the bill provides that excise taxes on distilled spirits shall be collected based on its alcohol content, subject to the provisions of the National Internal Revenue Code.

By this year, alcoholic products with 45 percent alcohol by volume and less will be charged P42 per proof liter. The rate will go up to P150 per proof liter by January 1, 2014.

Alcoholic products with more than 45 percent alcohol by volume will be charged P317.45 per proof liter. By January 1, 2013, the rate will rise to P233.73 per proof liter but will be reduced to P150 per proof liter by January 1, 2014.

A tax of P300 will be imposed on all champagnes regardless of proof. Still wines regardless of proof will be levied P50.

Excise taxes equivalent to P25 per liter will be imposed on fermented liquor including beer, lager beer, ale, porter, and other fermented liquors except tuba, basi, and tapuy.

Meanwhile, a P2.50 will be imposed on each kilogram of tobacco. Chewing tobacco will be charged P1.87 per kilogram. Cigars will be charged P200 per piece.

Effective this year, cigarettes packed by hand will be charged P14 per pack. On January 1, 2013, it will go up to P22 per pack and later rise further to P30 per pack effective January 1, 2014.

Cigarettes packed by machine will be levied P14 per pack if the net retail price is P10 and below per pack. But if the price is more than P10 per pack, it will be charged P30.

Effective January 1, 2013, the tax rates for cigarettes packed by machine will be P22 per pack if the net retail price is P10 and below per pack and P30 per pack if the net retail price is more than P10 per pack.

Effective January 1, 2014, the tax shall be P30 per pack. (Kathrina Alvarez/Sunnex)