Sin tax collections reach P16 billion in November

MANILA, Philippines - Excise tax collections from tobacco and alcohol continued their uptrend in November on the back of higher product volumes as companies frontloaded supplies ahead of a further hike in levies by January.

In a statement on Tuesday, the Bureau of Internal Revenue (BIR) said the so-called “sin” taxes went up 39.58 percent to P16.298 billion last month.

This brought the 11-month tally to P123.641 billion, up 25.96 percent from same period a year ago, and rising further from a fresh record set during the first 10 months.

Comparable absolute values were unavailable and could not be secured as of press time.

In a text message, BIR Commissioner Kim Jacinto-Henares refused to attribute the increase in sin tax collections to higher consumption as a result of supply frontloading, which she said is a “natural phenomenon.”

“For as long as the rate keeps on increasing annually, companies will always frontload,” Henares said.

"We have always said that the increase in tax rate will compensate for the slowdown in increase in volume,” she added.

Based on BIR figures, volume of cigarettes rose by 25.22 percent in November and more than a tenth for the first 11 months.

Factory supply and imports of fermented liquors and wines also increased 0.96 percent and 58.62 percent in November, respectively. They were up 1.33 percent and 33.9 percent so far this year.

Only the volume of distilled spirits and compounded liquors posted a decline in monthly and year-to-date figures, data showed. They were down 2.28 and 4.78 percent, respectively.

“Collection will continue to increase as the rates are adjusted four percent annually and of course, volume will increase (taking into consideration population growth alone),” Henares pointed out.

Signed by President Aquino in 2012, Republic Act 10351 increased excise levies in tobacco and alcohol products in what the administration said is a health measure meant to deter smoking and excessive drinking.

While there was an increase in tobacco and liquor volumes, Henares said this should not be considered as a sign that the sin tax reform is failing.

“We have always maintained that we can have a higher tax rate, which will result in slower consumption without hurting revenue collection,” she said.

“It just means (that) the tax rate could have been set higher than what was passed into law,” she added.