Higher booze, cigarette prices as sin tax law takes effect

MANILA, Philippines (UPDATED) – New “sin” taxes on cigarettes and alcohol dampened the New Year party spirit when they were introduced in Tuesday, January 1, as part of a government bid to boost finances.

Many stores started selling tobacco and drink at inflated prices before midnight, ahead of the official implementation of Republic Act No. 10351 or the restructured sin tax law, hitting partygoers in the pocket.

Tax on cigarettes will gradually be raised to P30 ($0.72) per pack by 2017, roughly doubling the current price to around P52.

Duty on alcohol will also increase gradually until 2017, increasing the price of a bottle of beer by 23.50 pesos, with varying levels for other drinks including wine and spirits. It will be further increased by 4% each year thereafter.

“The new prices compared to countries like Singapore for example, are still low, but for the ordinary Filipinos they are expensive,” said Laudemer Angeles, a 33-year-old shop owner in the town of Bacoor, south of Manila.

“Many of my customers were complaining about the higher prices and were not too happy when they bought their booze and smokes for their parties last night.”

Anti-smoking campaigner Emer Rojas said he hoped the new taxes would lead to a gradual decline in the number of people suffering from tobacco-related illness.

“I think the sin taxes should even be raised higher,” he told AFP. “But we commend President Aquino for showing his resolve in signing the law.”

The government has said that the country of 100 million has the highest incidence of smoking in the region, with tobacco-related diseases costing the country P177 billion ($4.3 billion) last year.

The new taxes aim to raise over P33 billion ($800 million) this year alone, gradually increasing over the coming years.

A large percentage of the money will go towards the government’s health care program.

The government first asked parliament to raise taxes on “sin” products as early as 1997, but a strong lobby by tobacco manufacturers stifled change.

The lobby included members of parliament representing tobacco-growing regions as well as powerful cigarette companies that enjoyed one of the lowest tobacco taxes in Southeast Asia.

Here’s a quick reference on the new tax rates, which will be billed on top of the 12% value added tax:

Tobacco products

Cigarettes packed by hand (this comprises bulk of tobacco products produced in the country) – P12.00 per pack

Cigarettes packed by machine – P12.00 if the cost per pack is P11.50 or below; P25 for packs that cost more than P11.50.

Cigars – additional P5.00 per cigar

Alcoholic beverages

Distilled spirits – P20 per proof liter

Sparkling wines/champagnes 

– P250 if the net retail price (excluding the excise and value-added taxes) per bottle of 750 ml is P500 or less; 

– P700 if the cost is more than P500

Still wines and carbonated wines containing 14% of alcohol by volume or less – P30.00

Still wines and carbonated wines containing more than 14% of alcohol by volume but not more than 25% of alcohol by volume – P60.00

Fortified wines containing more than 25% of alcohol by volume shall be taxed as distilled spirits

Fermented liquors

– P15 if the net retail price (excluding excise and value-added taxes) per liter of volume capacity is P50.60 or less

– P20 if the net retail price (excluding excise and value-added taxes) per liter of volume capacity is more than P50.60

– P28.00 for fermented liquors brewed and sold at microbreweries or small establishments such as pubs and restaurants, regardless of the net retail price.

For further details, refer to the implementing regulations below: 

– Rappler.com, with Agence France-Presse