DOF won’t withdraw pending ‘sin’ tax bill

BUSINESS
November 25, 2019

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THE Department of Finance (DOF) will not withdraw its proposal seeking to increase “sin” taxes on alternative tobacco products despite President Duterte’s pronouncement banning the public use and importation of vapes and electronic cigarettes.
    
Finance Secretary Carlos G. Dominguez III said that legislative deliberation on proposed higher excise taxes on e-cigarettes and vape products should continue in the Senate as they await the President’s executive order (EO)on the ban.
    
“We are awaiting the EO on this matter from the Office of the President. In the meantime, we urge the legislature to pass the measure that is pending their approval,” Dominguez told reporters in a mobile phone message late Wednesday when asked if the DOF will still push for higher taxes on e-cigarettes and vapes.
    
President Duterte recently directed authorities to ban the use of vapes and e-cigarettes in public as well as their importation, saying “it is toxic, and government has the power to issue measures to protect public health and public interest.”
    
Last week, the Department of Health (DOH) reported the first case of e-cigarette or vaping-associated lung injury (EVALI) in Visayas.
    
In recent months, a spike in the number of cases of EVALI has also been seen in the United States, with over 2,000 cases reported, and 39 people having lost their lives.
    
Earlier, both the DOF and DOH said that it was better to regulate the use of vapes and e-cigarettes in the country than imposing a blanket ban on these products.
    
According to the health and finance departments, a total ban may just force vapes and e-cigarettes onto the black market, where the products would be harder to control by the government.
    
President Duterte had endorsed higher taxes on alternative cigarettes and alcoholic beverages, or Senate Bill No. 1074, as his urgent measure that needs to be passed by Congress before yearend and implemented beginning January 2020.
    
In his letter to the Senate leadership, President Duterte sought the swift passage of the bill “to address the urgent need to generate additional revenue to support the effective implementation of the Universal Health Care Act and to further protect the right to health of the people.”
    
SB-1074 aims to align the tax rate of heated tobacco and vape with traditional cigarettes at P45 beginning next year, P50 in 2021, P55 in 2022, and P60 in 2023, with five percent annual increases onwards.
    
The proposed bill also covers alcoholic beverages, which once passed into law will increase the tax on distilled spirits from P23.5 to P90 per proof liter with a 20 percent ad valorem tax beginning next year.
    
Meanwhile, fermented liquors and alcopops would be taxed at P45 per liter, up from P25.4. Finally, a specific tax of P600 would be imposed on sparkling wines, while a specific tax of P43 would be imposed on still and carbonated wines beginning 2020.
    
The DOF expects SB-1074 to raise at least P47.9 billion in incremental revenue for its first year of implementation.

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