Philippines: ''Sin'' Tax Collections up 64% in September

Source from:  Business World  11/25/2013

"SIN" TAX collections more than doubled as of September with the implementation of a new law that raised excise taxes on alcohol and tobacco products.

The Finance department said in a statement that the Bureau of Internal Revenue's (BIR) "sin" tax take in the first nine months reached P63.6 billion, up 63.92% from last year's P38.8 billion.

"This is already 74% of the total projected excise tax collections for 2013, P34 billion of which comes from the incremental revenues from RA (Republic Act) 10351 or the Sin Tax Law enacted on December 20, 2012," it said.

The BIR aims to collect P85.86 billion in "sin" taxes this year, of which P51.654 billion will come from tobacco products and P34.206 billion from alcohol products.

Broken down, collections from tobacco products from January to September amounted to P40.2 billion, up 83.9% annually.

"This is notwithstanding the 27.5% decline in the volume of production equivalent to P1.08 billion packs resulting from the increase in tax rates," the Finance department said.

It likewise noted that, for the third quarter alone, excise tax collections from tobacco products grew by 140.02% year on year to P18.9 billion.

"The combined collections for the 2nd and 3rd quarters are more than enough to offset the decline in collections reported in the 1st quarter brought about by the heavy frontloading of the tobacco industry during the last quarter of 2012," the department said.

Other quarterly data, however, were not immediately available.

Excise collections on alcohol products in the nine months ending September, meanwhile, reached P23.4 billion, greater by 38.23% year on year.

The Finance department said the increase in "sin" tax collections in the period came despite a significant drop in the volume of cigarettes and alcohol removals.

The BIR mandates that the excise tax due on "sin" products are paid before removal from the place of production.

"For the first three quarters, volume of tobacco removals declined by 27.5% compared to the same period in 2012," it said.

"Similarly, volume of fermented liquor produced in the market has also declined by 11.6%, a clear manifestation of the relatively inelastic demand for these products. In contrast, volume of removals for distilled spirits actually increased by 23.0%, despite the change in the tax structure," the department added.

The Sin Tax Reform Act of 2012, which restructures the excise taxes on alcohol and tobacco products, took effect Jan. 1.

The act sets two tiers both for tobacco products and fermented liquor, which will gradually increase to settle at a single rate by 2017, and a combination of ad valorem and specific taxes for distilled spirits.

In 2012, the BIR's "sin" tax collections totaled P56.838 billion, of which P32.942 billion was from tobacco products and P23.896 billion from alcohol products. Enditem