MANILA - The government's tax collections from tobacco and alcohol fell 14% to P20.45 billion in the first half of the year as manufacturers withdrew their products from warehouses to avoid a scheduled increase in excise tax rates.

Preliminary data from the Bureau of Internal Revenue showed that cigarette manufacturers' tax payments from January to June dropped by 24.3% to P10.22 billion, while those of liquor makers went down slightly by 0.46% to P10.23 billion.

Finance Undersecretary Gil Beltran said it has been a practice of sin product manufacturers to frontload the withdrawal of their products from warehouses before tax rate adjustments are implemented in the beginning of the year.

Republic Act 9334, or the indexation of sin taxes signed in 2004, mandates that an increase in excise tax be slapped on cigarettes and liquor products every two years (including 2009) until the increase reaches 20% by 2011.

Beltran said manufacturers pulled out their products late 2006 and late 2008 to take advantage of lower tax rates.

Major cigarette producers include Fortune Tobacco of taipan Lucio Tan, Philip Morris Philippines Manufacturing Inc., La Suerte Cigar & Cigarette Factory while alcohol producers include Ginebra San Miguel, Tanduay Distillers, Consolidated Distillers of the Far East, Diageo Philippines, Distileria Bago, and others.