Sin tax collections fall 9% to P19.8B in h1 despite higher rates

The government effort to increase revenue suffered another setback as excise tax collected from manufacturers of cigarettes and liquor fell a little over nine percent in the first half of the year despite the imposition of higher taxes on the sin products for the third straight year. Department of Finance’s data showed that excise tax from tobacco and alcohol products withdrawn from the warehouses of local manufacturers reached P19.8 billion from January to June this year, P2 billion lower than the P21.8 billion take in the same period last year. The amount collected in the first semester was P1.02 billion short of the programmed collection of P20.85 billion from cigarette and liquor makers in the country. The lower tax take from alcohol and tobacco products has been attributed to the decision of local manufacturers to front load their withdrawals from warehouses late last year to take advantage of lower rates. The rate of excise tax slapped on cigarettes and alcohol products went up by eight percent this year as provided under Republic Act 9334 forcing manufacturers to front load or remove their inventories from their warehouses during the last quarter of 2006 to take advantage of lower rates. In the first half of the year, statistics showed that excise tax collected from tobacco products plunged by 19.6 percent to P11.05 billion from P13.75 billion in the same period last year. The tax take was P1.94 billion short of the programmed collected of P12.99 billion from cigarettes. On the other hand, the excise tax collected from alcohol products rose 9.1 percent to P8.78 billion from P8.05 billion surpassing programmed collection of P7.86 billion by P920 million. Nelson Aspe, deputy commissioner for operations of the Bureau of Internal Revenue (BIR), earlier said the government is set to adopt a new security measure to help plug the leakages on the excise tax payments made by manufacturers of tobacco and alcohol products. Aspe said the BIR would beef up the revenue officers on premises (ROOPs) assigned to guard the movement of goods in the manufacturing plants of tobacco and liquor makers. He added that the BIR would adopt a new security feature called fuse on stamps or labels to be placed on the tobacco and alcohol products to make sure that the correct excise taxes are paid by the manufacturers. According to him, the new security feature would replace the existing system that could easily be tampered by scrupulous individuals resulting to heavy losses on the part of the national government. This year, the BIR sees excise tax collected from manufacturers of cigarettes and liquor rising 4.2 percent to P44.72 billion this year from P42.92 billion last year. Tax take from cigarette manufacturers would rise 3.62 percent to P27.78 billion this year while that from alcohol products would increase 5.1 percent to P16.94 billion. Last year, the excise tax take of the BIR from sin products went up by 5.4 percent from P40.71 billion in 2005 but was P1.94 billion short of the programmed collection of P44.86 billion. 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. - GMANews.TV