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Sin tax collection target set at P297.8 billion in 2021, DoF says

THE GOVERNMENT has set a target of P297.8 billion for excise taxes collected on so-called “sin” products this year, driven by higher tax rates, which will offset the expected slump in volumes due to the economic hardship caused by the pandemic, the Department of Finance said.

The target was adopted by the Development Budget Coordination Committee during its 187th meeting in December, Finance Assistant Secretary Ma. Teresa S. Habitan told BusinessWorld via Viber last month.

This year’s target was 29% bigger than the downgraded P230-billion goal for 2020, and the P269.1 billion collected in 2019, by 11%. However, this was 10% lower compared to last year’s original goal of P332.2 billion, before economic managers slashed their revenue projections to consider the impact of the pandemic on consumption.

Ms. Habitan said the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BoC) are expected to collect P177 billion from excise taxes on tobacco products, P81.6 billion from alcoholic beverages, P39 billion from sweetened beverages and P200 million from electronic cigarettes (e-cigarettes).

Excise tax rates on “sin” products have been increased again this year as per the timetable set out in law, with Ms. Habitan noting that sales volumes will be lower in line with the economic slowdown, weighing on projected revenue.

Republic Act (RA) 11346, signed in July 2019, increases the tax imposed on cigarettes to P50 per pack in 2021 from P45 last year.

RA 11467, which was signed into law at the start of 2020, increased the excise tax on heated tobacco products to P27.50 per pack this year from P25 last year.

Vapor products with nicotine salt will be levied a P42 tax per milliliter, up P5 from the 2020 rate.

Tax rates on conventional freebase or classic nicotine vapor products will also increase to P50 per ten milliliters from P45 previously.

RA 11467 also calls for a tax hike for alcohol products, increasing the specific tax of distilled spirits to P47 per proof liter starting 2021 from P66 previously, while keeping the ad valorem tax at 22% of net retail price.

Fermented liquors will also be taxed at P37 per liter, up from P35 last year.

The BIR and BoC collected P212.94 billion in the 10 months to October, exceeding the target by 16.88% but still behind the year-earlier pace by 6.7%.

Tobacco collections fell 3% from a year earlier to P129 billion, while those from alcohol products fell 8% to P57.37 billion. Collections from sweetened beverages fell 19% to P29.56 billion.

Tax collections from these products exceeded the overall target for the period by around 17%. — Beatrice M. Laforga

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