Senate OKs sin tax bill

Posted at 11/20/12 8:43 PM

MANILA (UPDATED) - The Senate, in a 15-2 roll call vote, approved on third and final reading Senate bill 3299 re-indexing the excise taxes on tobacco and alcohol products.

Senators Joker Arroyo and Francis Escudero voted against the bill.

This was initially stalled by moves of Senate President Juan Ponce Enrile and Ferdinand Marcos Jr. of the tobacco-producing provinces over differences in burden sharing and the schedule of implementation.

The amendments and likely vote were stalled by Marcos’ amendments, which included the further staggering of the already staggered implementation of the tax for tobacco.

Senator Franklin Drilon eventually agreed to the staggered imposition of a P26 unitary tax rate on cigarettes starting next year with the full imposition by January 1, 2017.

Hand-packed cigarettes will be imposed a 12-peso tax by January 1, 2013, going up to to 15 pesos by January 1, 2014, 18 pesos by January 1, 2015, still at 21 pesos by January 1, 2016, and 26 pesos by January 1, 2017.

The staggered imposition of taxes on machine-packed cigarettes will be applied differentially depending on the price tier of cigarettes.

Low-end, machine-packed cigarettes (with current excise taxes less than P7.56) will start with a 12-peso tax by January 2013, going up to 15 pesos in 2014, 18 pesos in 2015 and 21 by 2016 and 26 by 2017.

Mid-priced, machine-packed cigarettes (with current excise taxes between 7.56 to 12) will start at 16 in 2013, up to 18 in 2014, 22 by 2015, 24 by 2016 and 26 by 2017.

High-end, machine-packed cigarettes (with excise tax over P12) will start at 20 by 2013, 21 by 2014, 22 by 2015 and 24 by 2016 and 26 by 2017.

Distilled spirits, meantime, will be levied 20 pesos per proof liter, plus 15% of the net retail price by January 2013; by 2015, this will go up to 20 pesos per proof plus 20% of net retail price.

Sparkling wines worth less than 500 pesos per 750 ml will be levied 250 pesos, while those over 500 pesos will be levied 700 pesos.

Still wines and carbonated wines may be levied either 30 or 60 pesos depending on the percentage of alcohol.

Fermented liquor worth less than 22 pesos per liter will be imposed a 20-peso tax per liter

Fermented liquor worth over 22 pesos per liter will be imposed a 25-peso tax per liter.

The taxes will be shared by the tobacco and alcohol industries, 60% to 40%.

Enrile protested the burden sharing between the 2 industries which, based on his computations, leans in favor of the alcohol industry in succeeding years.

Government projects revenues of about P40B which it will use to expand PhilHealth coverage and other health-related projects of the government. It will also earmark 15% of earnings from locally-made Virginia tobacco products for beneficiary provinces.

The bill, meantime, will also require local manufacturers to source 15% of the requirements from local tobacco farmers.

The bill is now expected to go to the bicameral conference committee to reconcile it with the version of the House of Representatives approved earlier this year.