Sin taxes reach P78.3 B in 9 months

MANILA, Philippines - Excise tax collections from the sale of tobacco and alcohol products continued to outpace the government’s target in the first nine months of the year, according to the latest data released by the Bureau of Internal Revenue.

The BIR collected P78.3 billion in excise taxes from January to September this year, exceeding its goal for the period by 21.4 percent or P13.8 billion.

Last year, excise tax collections surged 81.2 percent to P100.9 billion with the incremental revenue under the sin tax reform amounting to P51.1 billion.

Internal Revenue Commissioner Kim Henares attributed the overwhelming growth in excise tax collections to the implementation of the amended sin tax law which increased the tax on tobacco and alcohol.

Henares said higher-than-expected collections invalidate allegations that the government is losing substantial revenues through illicit trade as insinuated by the report prepared by the International Tax and Investment Center (ITIC) and Oxford Economics.

The report claimed that illicit tobacco consumption accounted for 18.1 percent of the 105.5 billion cigarettes sold locally.

In debunking the report, the BIR said the data used was incomplete and lacked proper attribution as to source.

As compared to the report, the BIR pointed out that cigarette removals/consumption of 107.2 billion sticks is 1.7 billion sticks more than the 105.5 billion sticks (inclusive of the alleged illicit 19.1 billion sticks) cited by Oxford Economics.

Henares, however, said the agency was not totally discounting the fact that illicit cigarette consumption exists as it has become a worldwide concern.

She assured the public that the government remains true to its commitment to run after tax evaders.

“The Bureau, together with the Bureau of Customs, has been very consistent in its fight against smugglers of goods as this affect our revenues,” Henares said.

“We implemented various measures to counter illicit cigarette activities such as implementation of stamp tax on cigarettes. We have also acted on reports by sectors to address allegations of misdeclaration / underdeclaration, and we are strictly monitoring removals of cigarettes products to ensure that those that are sold in the market are properly taxed,” she added.

According to the Oxford Economics report, the Philippines has become one of the biggest markets for illegal cigarette trade among member countries of the Association of Southeast Asian Nations (ASEAN), with illicit consumption almost tripling in 2013.

Illicit tobacco consumption in the Philippines accounted for 34.5 percent of all untaxed cigarettes consumed in the 14 countries studied, the second highest after Vietnam which took up a 39 percent share.