MANILA, Philippines - The Bureau of Internal Revenue maintained that the sin tax reform law, which took effect early last year, has been effective in shoring up government revenues with the agency even exceeding its tax collection targets for cigarettes and alcohol.
Internal Revenue Commissioner Kim Henares said six tax collections have improved since the implementation of the sin tax bill, which raised tax rates on alcoholic beverages and tobacco effective January 2013.
Henares issued this statement following allegations that the government continued to lose massive revenues due to illicit tobacco trade in the country.
According to a study commissioned by leading tobacco firm Philip Morris, the Philippines lost an estimated P15.6 billion in revenues because of non-payment of correct taxes by domestic cigarette manufacturers while the consumption of domestic illegal tobacco nearly tripled from 6.1 billion in 2012 to 17.1 billion last year.
The report, done by Oxford Economic and International Tax and Investment Center, was designed to measure the consumption of illicit cigarettes – those sold in the domestic market but fail to comply with the right tax dues – in the Philippines and its impact on revenue losses for the government.
The report found that 19.1 billion illicit cigarettes were consumed in the country last year, almost three times the estimated 6.4 billion illegally traded cigarettes used in 2012.
Henares, however, dismissed this as a smear campaign aimed at undermining the credibility of the BIR.
“As far as we’re concerned, we’re doing okay. We’re doing our job. I really don’t care what they have to say because the figures show that the sin tax law has been effective in improving our revenue collections. In fact, we have been exceeding our six tax collection targets.
Latest data from the BIR showed that excise tax collection on tobacco and alcoholic beverages reached P23.02 billion in the first four months of the year or 5.8 percent above the agency’s P21.74-billion goal. The amount was also 11.83 percent higher than the P20.58 billion reported in the same period last year.
Taxes from cigarettes amounted to P11.34 billion, up 14.22 percent from P9.93 billion. The amount likewise exceeded the P10.89 billion target.
Collection of taxes from alcohol products likewise went up 9.29 percent to P11.64 billion. The amount was well above the P10.89 billion goal.
The BIR expects sin tax collections to reach around P104.8 billion this year, P65.151 billion of which will come from cigarettes and P39.545 billion from alcoholic beverages.