Sin tax collection exceeds gov’t target

The government expects revenue collection from sin products to reach P105.3 billion in 2014

MANILA, Philippines – A month into the close of 2013, the Philippine government had exceeded its revenue collection goal from tobacco and alcohol products for the first year of the sin tax law’s implementation.

In a forum on Friday, December 20, to Bureau of Internal Revenue (BIR)  Commissioner Kim Henares said, “Revenue collection from sin products from January to November has already exceeded the government’s full year target.”

The sin tax measure was signed into law by President Benigno Aquino III exactly a year ago, Dec 20, 2012, and was implemented starting January 1.

The law was crafted to revise the rather outdated tax rates that made at least the tobacco products in the Philippines one odf the cheapest in world. Through the law, the goverment expects to increase revenue while at the same discouring current and would-be smokers.

Part of the revenue from the sin taxes is mandated to be used for the universal health care program.

A total of P91.6 billion has been generated from the taxes imposed on tobacco and alcohol products for the  first 11 months of 2013,  exceeding  the full year collection target of P85.86 billion, the BIR chief noted.

Of the total amount, P61.622 billion came from taxes on tobacco products, an amount that is 20.94%  higher than the  target collection of P51.65 billion from tobacco products.

Collected taxes from the sale of alcoholic beverages, on the other hand, reached P30 billion from January to November, only P4 billion short of the P34 billion annual  target for 2013 of the government.

Henares said that the government expects revenue collection from sin products  for 2014 to reach P105.3 billion.

More funds for healthcare

The higher-than-expected collected revenues from sin products would result to a better healthcare program, according to Department of  Health ( DOH) Undersecretary Ted Herbosa.

“This (sin tax law) has greatly enhanced excise tax collections, which would translate to an increase in funding for our healthcare programs,” he noted.

Herbosa added that the government has allocated P84 billion for the budget of DOH for 2014, a 58% increase from the 2013 budget. The increase is also the highest so far in the history of the department.

The BIR chief also stressed that the higher-than-expected collected revenue from sin taxes proves that the government is capable of fulfilling its mandate of providing healthcare for Filipinos.

“Everywhere in the world, most countries would want a healthy population. Some countries have been good at investing in [healthcare], while others have not been good at it. For some time, we have not been good at it,” Henares said.

Decreased consumption?

But has the government achieved its target of reducing consumption of tobacco and alcohol products in the country?

“It’s too early to tell,“Herbosa said.

Action for Economic Reforms, however claimed that  industry studies  point to lower  consumption of these goods.

Citing a consumer study conducted by AC Nielsen, the  group claimed that  smoking prevalence dropped from 52% to 46 % among smokers aged 20 to 44 years old for the first half of 2013.

Data from the BIR also showed a  reduction in the volumes withdrawn from plants for tobacco and fermented alcohol products in the first 11 months of the year  by  16.97% and 12.18%, respectively.

These figures, according to Action for Economic Reforms, suggest that  the number of cigarettes and fermented liquor have dropped.

Withdrawn volume for distilled drinks, however, increased by 26.0 4 % from January to November this year. – Rappler.com 

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