'Sin' tax collections down

MANILA, Philippines - Collections from sin taxes declined by roughly 20 percent to P25.4 billion in 2011 from the 2010 tax-take, the Action for Economic Reforms (AER) said, citing data from the Department of Finance (DOF).

Data showed that the government generated P31.5 billion in sin taxes in 2010.

Finance Undersecretary Jeremias Paul said that the decline in revenues shows that the current excise tax scheme for tobacco is structurally flawed, and is in need of immediate changes.

According to the Finance department, revenues from sin taxes fell by 13 percent in 2009, and 12 percent in 2007.

“This is the worst fall yet in for our tobacco sin tax revenues. It’s a tell-tale sign that the system is structurally defective. That’s why we need the Abaya reform bill to fix this,” Paul said.

For its part, AER senior economist Jo-Ann Latuja said unless the administration-backed Abaya sin tax measure is passed, the government would continue to lose revenues from sin taxes.

Already, the DOF has estimated that at least P 19.5 billion has been lost in revenues from 2006 to 2010.

Aside from the revenue losses, Latuja said the current tax structure also encourages smoking especially among the youth.