Winemakers whining over proposed tax hike

MANILA, Philippines – Wine companies expressed strong opposition to the House of Representatives' version of alcohol taxes and insisted that it would kill the local industry.

In a hearing of the Senate ways and means committee on Thursday, August 29, Christopher Quimbo, president of Calabria Company Limited, said that the House version of the bill is simply unreasonable.

Quimbo's company, which sells popular and affordable wine brand Novellino, currently pays P37.9 per liter. The House version proposes to increase that to as high as P97.5 per liter or an increase of over 157%.

For sparkling wines, the bill proposes an ad valorem tax of 15% of the net retail price (excluding excise and value-added taxes) per liter and a specific tax of P656 per liter. The specific tax would increase by 7% in 2021 onwards.

For still and carbonated wines, it would be P60 per liter, to be increased by 7% starting 2021.

With the proposal, Quimbo said the government would be able to collect 3 times more than what his company makes.

"We make wine for the masses and they are very price sensitive. If we increase prices that substantially, we cease to exist," he said.

Moreover, Quimbo noted that they paid P72.5 million in taxes in 2018. He said this is already over 99% of what the government has collected for wine, citing the data recently presented by the Department of Finance (DOF).

Meanwhile, Pablo Garcia Morera of the Espa-Fil Import and Export Corporation said the wine industry's market share in the Philippines is only over 1%.

Morera said that while taxes "need to be adjusted a little bit," the House version is unreasonable and would not add much to the government's coffers regardless of high the taxes will go.

According to Morera, taxes from the industry are just a "drop in the bucket" for the government.

The House version differs greatly from what the DOF proposed.

Finance Undersecretary Karl Chua said they want a simpler system and to just increase the indexation of taxes to 10% from 4%.

"We are open to keeping our simpler system if that will be okay with the wine industry," Chua said.

The government is pushing for higher taxes on alcohol to fund programs under the universal health care law. – Rappler.com

Grab a bottle of wine with this Shopee voucher

Ralf Rivas

A sociologist by heart, a journalist by profession. Ralf is Rappler's business reporter, covering macroeconomy, government finance, companies, and agriculture.

image