BIR misses target for ‘sin taxes’

The Bureau of Internal Revenue’s tax collection last year from cigarette and liquor companies fell below target despite an eight-percent increase in the rate of excise tax slapped on cigarettes and alcohol products.

Data from the BIR showed that excise tax collected from tobacco and alcohol products, otherwise known as “sin taxes,” amounted to only P42.16 billion last year or P2.5 billion below the P44.64-billion target.

Collections for 2007 were also P158 million lower than the 2006 take, data further showed.

Of the total excise tax collections, excise tax from tobacco products fell 11.5 percent to P23.21 billion last year.

On the other hand, tax collected from alcohol products rose 17.7 percent to P18.95 billion.

The BIR attributed the lower sin tax collections to the decision of local manufacturers to advance their withdrawals from warehouses late 2006 to take advantage of lower rates.

The rate of excise tax slapped on cigarettes and alcohol products went up by eight percent in 2007 under Republic Act 9334 or the indexation of sin tax on alcohol and tobacco products.

The law prescribes tax increases every two years until the increase reaches 20 percent by 2011.

Last year, the BIR collected P711.6 billion or below the target of P765.9 billion.

For January 2008, the agency expects to have collected at least 10 percent more than what it had collected in the same period last year although Internal Revenue Commissioner Lilian Hefti said the agency is still making the final computations.

The BIR collected P49.73 billion in January last year. For the whole year, the BIR is tasked to collect P845 billion.

The National Government hopes to wipe out the budget deficit this year or two years ahead of the 2010 deadline.