Another increase in “sin” taxes — which consumers ultimately pay for — greeted 2022, to not only discourage smoking and drinking which incur public and private health costs, but also to raise more revenues to finance the universal health care (UHC) program being implemented by the state-run Philippine Health Insurance Corp. (PhilHealth).
Effective Jan. 1, 2022, the excise tax slapped on cigarettes rose to P55 per pack from P50 a pack last year. This meant cigarette prices will rise by at least P5 per pack compared to last year’s. The annual rise in cigarette excise will be implemented until 2023 when the rate reaches P60 per pack, under Republic Act (RA) No. 11346 or the Tobacco Tax Law of 2019.
RA 11467 signed by President Duterte in 2020 — another “sin” tax law enacted before the COVID-19 pandemic struck — slapped a higher P30 per pack of excise tax on heated tobacco products or e-cigarettes in 2022, from P27.50 a pack in 2021.
Under RA 11467, the excise tax rate on conventional freebase or classic nicotine vaping products increased to P55 per 10 milliliters (ml) this year, from P50 last year. The rate for nicotine salt vapes rose to P47 per ml from last year’s P42 per ml.
RA 11467 also jacked up the excise on distilled spirits — brandy, gin, rum, tequila, vodka, and whisky — to a specific tax of P52 per proof liter, from P47 in 2021, on top of the ad valorem tax equivalent to 22 percent of net retail price.
This year, fermented liquors like beer, lager beer, ale and porter were slapped with excise tax of P39 per liter, up from P37 in 2021.
The excise on wines, meanwhile, has been increasing by 6 percent yearly from the base of P50 per liter in 2020.
Budget documents had shown the government targeted to raise P172.3 billion from tobacco, plus P82.21 billion from alcoholic drinks, in 2021. Alongside this year’s excise tax hikes, revenues from cigarettes and e-cigarettes as well as alcohol had been projected to rise to P199.6 billion and P94.8 billion, respectively.
Despite the pandemic-induced recession in 2020, “sin” tax collections from cigarette and alcohol products rose to a total of P227.6 billion from P224.6 billion in 2019. Actual 2020 collections exceeded the conservative P201.5-billion target, as the most stringent lockdowns imposed at the onset of the COVID-19 pandemic dampened sales and limited distribution of “sin” products due to movement restrictions on non-essential goods plus some local government units’ (LGUs) drinking ban ordinances in line with curfews.
The projected increases in the “sin” tax-take last year and this year were also despite reports of flourishing illicit cigarette trade, including smuggling in at least four ports flagged by legislators in the Lower House as “hotspots,” as well as manufacturing of unregistered brands and products in some economic zones. (©Philippine Daily Inquirer 2021)
