MANILA, Philippines – Filipinos may eventually have to pay more for cigarettes and alcoholic drinks after the House of Representatives approved two bills increasing the excise taxes on these items. 

Lawmakers approved House Bill (HB) 8677 on tobacco taxes and HB 8618 on alcohol taxes on 3rd and final reading on Monday, December 3. HB 8677 was passed with a vote of 187-7-1, while HB 8618 got 189-7-0.

How much would the increase be for tobacco taxes? HB 8677 would increase the tax on every cigarette pack from the current P32.50 to P37.50 in July 2019. The measure would then impose a P2.50 tax increase every year until July 2022, when a cigarette pack would cost P45 each. A 4% tax increase would then be imposed annually starting July 2023.

How much would the increase be for alcohol taxes? HB 8618 would increase excise taxes for distilled spirits like gin, rum, and vodka. The proposed increases are as follows:

• Starting January 2019, 22% ad valorem tax on the net retail price of the alcohol product (excluding excise and value-added taxes) plus a specific tax of P30 per proof liter.
• In addition to the 22% ad valorem tax, specific tax per proof liter will increase to P35 in 2020, P40 in 2021, and P45 in 2022.
• From 2023 onwards, on top of the ad valorem tax, the specific tax will be increased by 7%.
• 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 P650 per liter. The specific tax will increase by 7% in 2020 onwards.
• For still and carbonated wines with 14% alcohol or less, it will be P40 per liter, to be increased by 7% starting 2020. For still and carbonated wines with more than 14% alcohol, taxes will also increase by 7% on top of P80 per liter from 2020 onwards.

The tax on fermented liquors will be P28 per liter in 2019, P32 per liter in 2020, P34 per liter in 2021, and P36 per liter in 2022. After this, a 7% increase will be observed 2023 onwards.

The bill also seeks to increase the adjustment of alcohol taxes due to inflation from 4% to 7%.

HB 8618 would amend the National Internal Revenue Code of 1997 and Republic Act No. 10351, which restructured the excise taxes on alcohol and tobacco in 2012.

Where would the government revenues go?  The two tax measures are expected to fund the proposed universal health care program.

The Department of Health earlier said about P257 billion is needed for the first year of the program’s implementation.

Both bills are also expected to “significantly curb” tobacco and alcohol consumption among Filipinos. (READ: Lifestyle diseases ‘rapidly rising’ in Western Pacific region – WHO) – Rappler.com