Gov't to lose P2.4B in add'l revenue sans new sin tax law

MANILA, Philippines - The government stands to lose P2 billion to P2.4 billion in additional revenues if no new sin tax measure will be passed by 2013, Finance Undersecretary Gil Beltran said.

The amount represents additional revenues that are generated from sin taxes under Republic Act 9334 or the indexation of excise tax on tobacco and alcohol products.

The law, signed in 2004 by then President Gloria Macapagal-Arroyo, calls for an eight-percent increase in the excise tax rates on tobacco and alcohol products every two years starting in 2007.

The last adjustment takes effect this year, according to the law.

“So we need a new law by 2013,” Beltran said.

There are currently different versions of sin tax legislation pending in Congress.

The version supported by the Department of Finance is expected to raise P60 billion every year.

The department strongly supports measures seeking to raise taxes on the so-called sin products.

Finance Secretary Cesar Purisima has been quoted as saying that the sin tax reform law would make the industry more competitive.

At present, 90 percent of the Philippine tobacco market is controlled by PMFTC, the merged entity of Philip Morris and Lucio Tan-owned Fortune Tobacco Corp.

The department said the current tax structure is inequitable because products having the same current net retail price can be taxed differently if one was introduced before January 1997 and other one after 1997.