Philippines: Government seen to generate PHP126bn from higher tobacco taxes

• The government is expected to generate at least PHP126bn in additional revenues over the next five years following the passage of a bill that seeks to increase tobacco excise taxes, the Department of Finance (DOF) said on 5 Jun 19.
• The final approved bill on tobacco excise taxes, as ratified by Congress, is seen to increase the government’s sin tax revenues by PHP15bn in 2020, PHP22bn in 2021, PHP26bn in 2022, PHP32bn in 2023 and PHP31bn in 2024, for a total of PHP126 bn over the five-year period, according to initial data provided by Finance Undersecretary Karl Kendrick Chua.
• These figures, however, do not yet include the estimated revenues to be generated from the newly approved taxes on electronic cigarette products, Chua said.
• Finance Secretary Carlos Dominguez III said these projected revenues are also lower than what was originally anticipated by the DOF, because the final version of the bill scheduled the excise tax hikes on a staggered basis.
• Nevertheless, Dominguez said the bill would still enable the Duterte administration to implement the Universal Health Care (UHC) program by 2020.
• Late on 3 Jun 19, senators approved on third and final reading Senate Bill No. 2233 on tobacco excise taxes. The House of Representatives adopted the Senate version of the bill to ensure its swift passage.
• The bill provides for a unitary excise tax of PHP45 per pack on tobacco products in 2020. This will be followed annual increases of PHP5 per pack until the rate will have reached PHP60 in 2023, and a 5% annual increase thereafter.
• It also expanded the coverage for tobacco excise tax to include heated tobacco products and vapor products.
• Following the passage of the bill raising the taxes of tobacco, the Department of Health (DOH) is now looking at higher levies for e-cigarettes in the coming 18th Congress.
• As this developed, the president of a tobacco farmers’ group was dismayed by Congress’ passage of the sin tax bill.
• He said they do not understand the government’s plan about its passage that will increase taxes to fund the UHC program because if this continues, they will have decreased tobacco production.

External Link: https://www.philstar.com/headlines/2019/06/06/1924010/government-seen-generate-p126-billion-higher-tobacco-taxes