#AskTheTaxWhiz: Benefits from new law on alcohol, cigarette excise tax
New year, new taxes. The 3rd round of the tax hike for petroleum products due to the Tax Reform for Acceleration and Inclusion (TRAIN) law took effect starting January 1 – a P1 top-up for gasoline and kerosene, P1.50 for diesel. But that's not the only hike! Just last week, President Rodrigo Duterte signed a new law which increases excise taxes on alcoholic beverages, heated tobacco, and e-cigarettes.
Dear #ThePhilippineTaxWhiz, I see the law as an additional burden. Our TGIFs will be more expensive than usual because one way or another, the consumers will carry the burden of paying more for our vices. Do you think we can still acquire benefits from the law?
High-tier sin taxes from Republic Act (RA) No. 11467 are actually to persuade the public to be healthy, by limiting our consumption of alcohol and cigarettes, including vapes. For instance, drinks with distilled spirits will have 22% ad valorem tax per net retail price alongside P42 to P66 specific tax, the traditional heated tobacco with P25 to P32.50 tax per pack, and vape syrups ranging from P37 to P60. The law really wants us to feel the burden of paying more so we would be discouraged to continue with our vices. Health advocates are in favor of it, "for a healthier lifestyle."
In the next weeks or months, the retail prices of our favorite drinks are expected to increase ultimately. But think about this: 60% of the expected revenue from the law will be allotted to the continuity of projects under the Universal Health Care Act signed last year. The remaining 40% will be divided equally for (1) nationwide medical assistance – the Health Facilities Program of the Department of Health (DOH), and (2) the attainment of the Sustainable Development Goals determined by the National Economic and Development Authority. We are capable of spending for TGIFs. Let's use our capacity to help our government reach its agenda of revolutionizing public health systems.
In addition, the first clause of the law is very much for the Filipino people because it entails the exemption of value-added tax (VAT) on the sale or importation of prescribed drugs and medicines as approved by the DOH. Beginning 2020, diabetes, high cholesterol, and hypertension medicines will be VAT-free. Medicinal cure for cancer, tuberculosis, kidney diseases, and even mental illness will also be exempted from VAT come January 2023. Truly, this is for people's health. This is a new milestone for the supporters of the mental health law after the passage of RA No. 11036. I am hopeful (and you must be, too!) that the provisions will transcend into reality.
Tax 'na naman'?
At first glance, you'll say, "Tax na naman (Tax again)?" I will reply, "Oo, tax na naman! Pero may patutunguhan (Yes, tax again! But it's going somewhere)." We just need to educate ourselves about where our taxes go and of course, be vigilant and often ask the question: Do our public leaders deliver?
Our book Iwas Buwis-it: What to Do When Tax Attacks explains the nitty-gritty of taxes. To know more about the subject, you may grab a copy by emailing us at email@example.com, or by calling us at (02) 7622-7720. You may also visit a branch of National Book Store near you, though the book is often sold out! – Rappler.com
Mon Abrea, popularly known as #ThePhilippineTaxWhiz, is being recognized worldwide. He has been awarded as one of the 2017 Outstanding Persons of the World, 2015 The Outstanding Young Men of the Philippines, 2016 Move Awards Digital Mover, and an Asia CEO Young Leader of the Year. He is the founding president of the Asian Consulting Group (ACG) and the Center for Strategic Reforms of the Philippines (CSR). Assisting him in his column is his media and communications officer, John Carlo Santos. He graduated with a bachelor's degree in Philippine Studies from the University of the Philippines Diliman.
To know more about ACG and CSR's vision, you may email us at firstname.lastname@example.org or visit our website, www.acg.ph. You may also download the #TaxWhizPH mobile app to make tax compliance easier anytime, anywhere. Available on Google Play.