DoF frowns on bill allowing LGUs to impose excise tax

MANILA, Philippines - Allowing local government units to impose excise tax on manufacturers of cigarettes, liquor, motor vehicles, and mineral products will be troublesome to industries, producer and consumers, the Finance department warned. National Tax Research Center executive director Lina Isorena said the Bureau of Internal Revenue (BIR) is already collecting excise tax and 12 percent value-added tax (VAT) from petroleum products, alcohol products, tobacco products, automobiles, non-essential goods, and mineral products as mandated under the National Internal Revenue Code and Republic Act 9337, otherwise known as the Expanded VAT of 1997. “Imposing an excise tax at the local level may be too burdensome on the part of the manufacturers and producers and consequently on the consumers of said article as the tax is likely to be passed on via the price structure," Isorena said. A bill is pending before the House of Representatives to amend certain provisions of RA 7160 otherwise known as the Local Government Code of 1991, in a bid to strengthen LGUs. “Certain fees and charges are likewise levied on some of these products. Furthermore local business taxes are imposed on manufacturers, wholesalers, and retailers," she added. The NTRC has reservations on the ability of LGUs to impose and collect excise tax on on alcohol, tobacco, motor vehicles, non-essential goods, and mineral products as collections from excise tax is seen go down to P58.8 billion this year from its previous target of P61 billion due to global recession. “There is also a consideration of the capability of most local tax administrators to collect and administer the tax, since this imposition would require close monitoring," she added. -GMANews.TV