MANILA – Excise tax collections of the Bureau of Internal Revenue (BIR) from cigarettes rose by 31 percent to PHP83 billion in the first seven months of 2021 compared with the PHP63 billion collected during the same period last year.
An analysis done by the Department of Finance (DOF) based on data from the BIR shows that Philip Morris Fortune Tobacco Co. Inc. (PMFTC) remained the top cigarette manufacturer with excise tax payments amounting to PHP42.04 billion from Jan. 1 to July 31, which is 6.9 percent more than the PHP39.3 billion it paid during the same period last year.
In her report to Secretary Carlos Dominguez III, DOF Assistant Secretary Ma. Teresa Habitan said that despite Japan Tobacco International (Philippines) Inc. (JTI) registering the highest year-on-year (YOY) excise tax increase of 73.1 percent for the same period, it remained at the second spot in terms of market share with PHP38.8 billion in excise taxes paid.
JTI paid PHP22.4 billion in excise taxes from January to July of 2020, which means JTI’s tax payments grew by PHP16.4 billion in the same period this year.
“Based on the actual volume as of July 2021, cigarette excise tax collections reached PHP82.97 billion or a 31-percent increase than last year’s collections of PHP63.3 billion,” Habitan said during a recent DOF executive committee (Execom) meeting.
The remaining PHP2.13 billion of the total PHP82.97 billion in excise tax collections for the January-July 2021 period was paid by other cigarette manufacturers, such as the Associated Anglo American Tobacco Corp. (AAATC) and Kenstand Philippines Inc. (KPI).
Habitan said that based on tax data, PMFTC’s market share of 50.7 percent remained higher than JTI’s share of 46.8 percent for the first seven months of 2021.
“However, it should be noted that JTI’s share for (this) period increased by 11.4 percentage points when compared to last year. This was due to JTI’s increased volume of 55.8 percent year-on-year while PMFTC’s reported volume declined by 3.8 percent,” she said.
Based on the tax collections, JTI’s volume of removals was 498 million packs and 777 million packs for the first seven months of 2020 and 2021, respectively.
“This is equivalent to an increase of 278 million packs for the first seven months of the year,” Habitan said.
She said that of the PHP16.4-billion increase in taxes collected from JTI, PHP3.9 billion was the result of the increase in the tax rate while PHP12.5 billion was because of the increase in volume.
The tax rate on JTI’s tobacco products rose by 11.1 percent or PHP5 per pack, while volume increased by 55.8 percent or 278 million packs.
For PMFTC, the volume of removals for the first seven months of 2020 and of 2021 was 874 million packs and 841 million packs, respectively.
Habitan said this is equivalent to a decline of 33 million packs for the first seven months of the year.
Of the PHP2.7-billion increase in the tax collections from PMFTC, PHP4.2 billion was because of the increase in the tax rate, while there was a revenue loss of PHP1.5 billion from the decline in volume.
The tax rate for PMFTC’s products also increased by PHP5 per pack, while its volume declined by 3.8 percent or 33 million packs, Habitan said.
Habitan said the total combined volume of JTI and PMFTC as of July 2021 rose by 245 million packs or by 17.9 percent when compared during the same period last year, all of which came from JTI.
It was only under the Duterte administration that excise taxes on cigarettes and other tobacco products were increased thrice to raise more funds for the Universal Health Care (UHC) program and the government's other priority initiatives.
The first instance was under the Tax Reform for Acceleration and Inclusion (TRAIN) law in 2018.
This was followed by Republic Act (RA) No. 11346 or the Tobacco Tax Law of 2019, which hiked cigarette taxes to a uniform rate of PHP45 per pack starting last year; and RA 11467, which imposed another round of tax hikes on e-cigarettes, along with alcohol products, also starting in 2020. (PR)