Excise tax hike on alcohol, tobacco bills certified as urgent

By Azer Parrocha

January 8, 2019, 7:29 pm

MANILA -- President Rodrigo R. Duterte agreed to certify as urgent two measures meant to raise excise tax on alcohol and tobacco products to fund the government’s Universal Health Care (UHC) program.

Presidential Spokesperson Salvador Panelo said the President announced his decision during Monday’s 33rd Cabinet meeting in Malacañang.

Panelo was referring to Senator Manny Pacquiao’s Senate Bill No. 1599, which sought to further increase the excise tax on tobacco products.

Under the measure, the current cigarette tax rate of PHP30 per pack will increase to PHP60 per pack. This is aside from the annual increase of 9 percent from the current 4 percent increase in excise tax per year.

Pacquio’s measure was backed by the departments of Finance and Health.

“The recommendation of the Department of Finance (and Health) is that this bill should be certified as urgent because under the proposal, the tax on tobacco would be raised to 60 per pack while on the part of alcohol, it will be 40 per liter,” Panelo said.  

“So the recommendation is that that bill should be passed and signed into law. That was what was approved last night,” he added.

Panelo said if the measure passes into law then that will automatically amend what is stated in the Tax Reform for Acceleration and Inclusion (TRAIN) law.

“This is a key public health measure to reduce deaths and disabilities due to tobacco and alcohol consumption and, at the same time, a revenue measure to fund the universal health care program,” Panelo said.

In December last year, Finance Secretary Carlos Dominguez III pushed for the increase in the current tobacco excise tax rates to levels that would effectively curb smoking and also help supplement funds for the UHC program.

In the same month, the House of Representatives approved House Bills 8677 and 8618, which increase the tax on cigarettes and alcoholic drinks, respectively.

HB 8677 seeks to increase excise tax rates for tobacco by PHP2.50 every year, starting July 2019 until 2022.

Under the measure, cigarette excise tax rate will be raised to PHP37.50 per pack by July 2019, PHP40 for 2020, PHP42.50 for 2021, and PHP45 for 2022. The rate would be raised 4 percent every July annually, starting 2023.

Meanwhile, HB 8618 aims to to raise excise taxes on distilled spirits, wines, and fermented liquors.

Under the measure, the current 20 percent ad valorem tax imposed on distilled spirits shall be increased to 22 percent, while specific tax rates per proof liter of PHP30, PHP35, PHP40, PHP45 shall be imposed from 2019 to 2022. The specific tax rate shall be increased by 7 percent annually, starting 2023.

In November last year, the Bicameral Conference Committee approved the consolidated version of the UHC bill which aims to give all-inclusive health coverage for Filipinos.

Duterte endorsed UHC bill as among his priority measures during his State of the Nation Address on July 23, 2018. (PNA)