New sin tax law takes effect Jan 1

MANILA, Philippines - The newly-signed sin tax reform measure will be implemented as early as Jan. 1, 2013, Bureau of Internal Revenue Commissioner Kim Henares said over the weekend.

In a radio interview last Friday, Henares said the BIR would be releasing the implementing rules and regulations of Republic Act 10351, otherwise known as the Sin Tax Reform Act of 2012, next week.

Henares said there is no need to conduct public hearings anymore because the implementing rules will not deviate from the provisions of the law.

President Aquino signed Thursday the sin tax reform law after months of debates in both the House of Representatives and the Senate.

The sin tax reform measure corrects inequities in tax structure that have plagued the system for decades.

It also removes the price classification freeze that has pegged tobacco products to 1996 prices as the basis for their tax classification.

Furthermore, the approved version paves the way for a shift from the current multi-tiered system to a unitary tax regime by 2017 for tobacco and fermented liquor.

In terms of revenues, the new sin tax bill would allow a collection of P33.96 billion in incremental revenues from tobacco and alcohol for next year, and P184.31 billion over the next four years.

Although below the original target of P60 billion which the Department of Finance sought for, officials said it would still be enough to cover the financing requirements outlined by the Department of Health for the Aquino administration’s universal health care program.