Duterte certifies as urgent bill seeking higher taxes on alcohol, vaping products

President Rodrigo Duterte on Tuesday certified as urgent the bill seeking to increase taxes on alcohol, electronic cigarettes and vaping products.

In a letter addressed to Senate President Vicente Sotto III, Duterte said the passage of the bill is necessary in order “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.”

Once a bill is certified as urgent, Congress can skip the three-day rule, allowing lawmakers to pass a measure on third reading immediately after it is passed on second reading.

Under Senate Bill 1074, distilled spirits will be imposed an ad valorem tax of 20% on the net retail price per proof and a specific tax of P90 per proof liter on the first year of its implementation, which will be increased by P10 every year until the fourth year.  The specific tax rate will increase by 10% every year thereafter.

For fermented liquor and alcopops, the bill seeks a specific tax rate of P45 per liter on Year 1, increasing by P10 every year until Year 4. The specific tax rate will increase by 10% every year thereafter.

Wine products will be slapped with a specific tax of P600 per liter for sparkling wines and P43 per liter for still and carbonated wines. These rates will increase by 10% every year thereafter.

For e-cigarettes under the heat-not-burn product category, the bill seeks to increase the current rates of P10 per pack of 20 to P45 per pack on Year 1 to be at parity with regular cigarettes.

For vapor products, there will be a distinction between salt nicotine and freebase. From P10 per 10mL or less, salt nicotine will increase to P45 per mL, while freebase will increase to P45 per 10 mL on Year 1. These rates will increase by P5 every year until Year 4 then 5 percent every year thereafter.

The Department of Finance has estimated that the Senate bill would generate P47.9 billion for the Universal Health Care program in the first year of implementation as against the P17 billion that is expected to be collected under the House version.

The House of Representatives passed its version of the proposed legislation in August.

In July, Duterte signed a law increasing the excise tax on tobacco products.

Republic Act 11346 imposes an increase of P45 to P60 per pack in excise tax beginning next year to 2023 and then 5% yearly hike effective January 1, 2024. —KBK, GMA News