The reform of the alcohol and tobacco excise tax in the Philippines is expected to generate 51.4 billion pesos in revenue.
The Department of Finance stated that the proposed reform of the excise tax on alcohol and tobacco products is expected to yield 51.41 billion pesos in revenue.
In a document from the Department of Finance, it was deemed necessary to promote the reform of the excise tax on alcoholic beverages and tobacco products to overcome the shortcomings of Republic Act 9334.
The report released by the Department of Finance estimates that the implementation of a uniform and specific tax rate on alcohol and tobacco products will generate an additional revenue of 19.7 billion pesos in 2011.
The annual excise tax is projected to increase to 47.23 billion pesos in 2012 and to 51.41 billion pesos in 2013.
However, the Department of Finance claims that starting from 2014, 2015, and 2016, excise tax revenue will decline to 49.92 billion pesos, 47.25 billion pesos, and 44.95 billion pesos, respectively.
The Department of Finance believes that the following are better reasons for pursuing the reform of a uniform and specific tax rate: a) the aim is to ensure that the reform of the alcohol and tobacco excise tax remains consistent; b) it allows the government greater flexibility in adjusting the excise tax in a manner that does not jeopardize the reform revenue targets acceptable to industry companies; c) a single law is easier to manage in ensuring that any proposed changes to the Bureau of Finance do not jeopardize the revenue targets of the reform.
The reform stems from the weaknesses of the current multi-tiered system pointed out by the Department of Finance, which makes it easy to downgrade the consumption of high-priced products and high-tax brands or misreport them as low-priced and low-tax brands, resulting in lower tax revenues.
The Department of Finance emphasizes that in order to align the tax rates with neighboring countries, such as the Philippines, which has the lowest excise tax among Asian countries, the current excise tax structure needs to be reformed.
