2022 begins with taxes, price increases on cigarettes, alcohol

DANGEROUS FOR YOUR WALLET ALSO: As of January 1, the excise duty on cigarettes is P 55 per pack, up from P 50 last year. (Photo by RICHARD A. REYES / Philippine Daily Inquirer)

MANILA, Philippines – The new year begins with yet another increase in ‘sin’ taxes, aimed not only at discouraging smoking and alcohol consumption, but also generating more income to fund the universal health care program (CSU) implemented by Philippine Health Insurance Corp. (PhilHealth).

As of January 1, the excise duty on cigarettes is now P 55 per packet, up from P 50 last year. The annual increase P5 of this tax until it reaches P60 per pack of cigarettes is in accordance with Republic Law No 11346 or the Tobacco Tax Law of 2019.

And under Republic Law 11467, which amends the National Internal Revenue Code of 1997 with respect to so-called sin products, the excise duty on conventional or conventional nicotine-based vaping products is increasing this year. at 55 P per 10 milliliters against 50 P last year, while the tax on vaping with nicotine salts is now 47 P per ml, against 42 P in 2021.

RA 11467 also increased the excise duty on distilled spirits – brandy, gin, rum, tequila, vodka and whiskey – to 52 P per liter of proof against 47 P in 2021, in addition to the ad valorem tax of 22% of the net retail price.

Beer products, including lager, ale and porter, are subject to excise duty of 39 pesos per liter this year, up from 37 pesos last year.

Meanwhile, excise duties on wines have increased by 6 percent per year from the base of P 50 per liter in 2020 when RA 11467 was enacted.

Collections

Despite the pandemic and resulting lockdowns, which limited sales and distribution of products of sin, especially in 2020, collections of the Sin Tax on cigarettes and alcoholic beverages reached a total of 227 , 6 billion pesos against 224.6 billion pesos in 2019, exceeding the conservative P201. Objective of 5 billion.

The government has also targeted increasing the collection of the sin tax even amid reports of a flourishing illicit cigarette trade, including smuggling at at least four ports flagged by lawmakers as “hot spots.” », As well as the manufacture of unregistered products in certain economic zones.

The latest estimates from PMFTC Inc., the nationwide subsidiary of Philip Morris International, show that the sale of contraband or fake cigarettes reached 8.6% of the market last year, up from around 5.5% in 2020.

According to the Bureau of Internal Revenue, the 2.5 million packages of illicit cigarettes seized in 2021 amounted to some 123.3 million pesos in lost tax revenue.

The Customs Office, for its part, reported that year that it apprehended approximately 100 traders of illicit cigarettes and confiscated 38,827 cases or 1.3 billion pesos of illicit cigarettes. Excise duties lost on these contraband products have been estimated at 970.6 million pesos.

Grant

Amid these challenges, Finance Secretary Carlos Dominguez III vowed that the government would continue to fund the UHC program, which was enacted in 2019.

PhilHealth has actually received the largest grant of any state-owned and / or controlled company (GOCC) since 2014.

The record 2022 national budget of 5.0 trillion pesos allocated 80 billion pesos to PhilHealth to cover premium subsidies from indirect contributors, including 13.2 million poor households and 7.3 million elderly people.

The latest data from the Treasury Office also shows that the government allocated about the same amount, P76.9 billion, to this GOCC last November, almost half of the P163.4 billion allocated to other state-owned companies. during this 11-month period.

On the other hand, PhilHealth has come under fire for failing to resolve COVID-19 claims from private hospitals and for alleged corruption and mismanaged funds.

In addition, health costs and economic losses from consuming the products of sin have remained substantial despite the increased collection of the sin tax, according to a recent report by the think tank Center for Global Development based in Washington.

The finance ministry said it was working on a “strategy plan” of strategies, possibly including new or higher taxes, which could be implemented by mid-2022 when a new administration will take over.

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