One rate for 'sin' taxes to help curb smuggling - EU

MANILA, Philippines - The implementation of a single-tax rate for the so-called sin taxes would help minimize smuggling of imported distilled spirits, the European Commission (EU) and the European Chamber of Commerce said during a recent hearing at the House of Representatives.

European Commission representative Therese Yosuico and European Chamber of Commerce spokesman Leslie Stokes said the country could recover 50 percent of its revenue losses from smuggling if Congress approves the unitary rate tax system for alcohol and cigarettes or the sin taxes. 

“A one-rate excise tax system for all distilled spirit products will also have a positive effect on smuggling,” Stokes told the House ways and means committee during a hearing on the proposed changes on the sin tax law.

Stokes said that about 50 percent of all imported distilled spirits are smuggled under the multi-tier sin tax rates.

European companies export liquor products to the Philippines.

“The ECC is firmly of the opinion that the present excise tax system in the Philippines discriminates against the imported alcohol products,” Stokes said.

Estimates put the annual losses due to smuggling at $40 billion.

Aside from its positive effect on smuggling, Yosuico said congressional approval of the amendments to the Sin Tax Law as contained in House Bill (HB) 6079 would enable the country to adress concerns filed by the EU before the World Trade Organization (WTO).