House ways and means committee OKs bill on ‘sin’ taxes

A bill seeking to impose higher taxes on tobacco and alcohol products moved closer to being passed after a committee in the House of Representatives approved it on Wednesday.   Voting 46-14, the House committee on ways and means approved House Bill (HB) 5727 authored by Cavite Rep. Joseph Emilio Abaya seeking to restructure excise taxes on cigarettes and alcohol products, also known as “sin taxes.”   The bill was identified last year by President Benigno Aquino III as one of his administration’s priority measures to increase government revenues.   In approving the proposed legislation, the House panel adopted an amendment proposed by the Department of Finance (DOF), which seeks to impose excise taxes on cigarettes based on net retail prices.   Abaya’s bill originally proposed a unitary tax on all tobacco products, regardless of retail prices.   With the DOF amendment, HB 5727 now proposes cigarettes costing P11.50 to be sold for P23.50 during the first year of the legislation’s implementation. Tobacco products costing P11.50 and above, meanwhile, will be sold for P31.80.   The committee dropped Abaya’s proposal to tax alcoholic products based on proof, or the amount of alcohol a product contains.   It instead adopted the DOF’s proposal to tax these products also based on net retail prices.   “These amendments were proposed because we recognize the concern of all sectors and we want to be responsive to the industries [which will be affected],” Finance Undersecretary Jeremias Paul said in an interview with reporters.   Under the amended bill, the following taxes will be imposed on alcoholic products during the first year of implementation:

• P25 for distilled spirits (whiskey, brandy, rum, gin and vodka) with a net retail price of P90

• P150 for distilled spirits that retails from P90 to P150

• P320 for distilled spirits P150 and above

• P250 for wines P500 or less

• P700 for wines than P500

• P15.49 for fermented liquor (beer, lager beer, ale, porter) P50.60 or less and

• P20.57 for fermented liquor more than P50.60.

The government expects to generate P33 billion in revenues after the bill is passed into law, the Finance Department said.   The panel now needs to prepare a report for the House committee on rules to calendar the bill for plenary deliberations. —VS, GMA News