Alcohol industry wants fair treatment for all liquors

MANILA, Philippines — The country’s top distilleries are calling for the government to ensure equitable treatment on all types of alcoholic beverages under its proposed bill which aims to raise liquor taxes.

Distilled Spirits Association of the Philippines (DSAP) president Olivia Limpe-Aw said the industry would support the government’s proposal for higher taxes on alcohol products, “as long as it promotes a level playing field among industry players.”

With that said, Limpe-Aw said DSAP members are concerned that the current alcohol tax proposal pending in the Congress seeks to impose too much tax burden on distilled spirits and a lighter levy on wine products. 

“As we told the Department of Finance, if you want to increase our taxes, we’re okay with that as long as you level the field,” Limpe-Aw said during a recent Senate ways and means committee hearing,

In particular, Limpe-Aw said DOF’s plan to exempt wines from the ad valorem tax is unfair to other alcohol makers.

She said the DOF’s proposal wants to collect two types of taxes from every proof liter of distilled spirits – first, a P40 specific tax and second, a 22 percent ad valorem tax based on net retail price per proof.

On the other hand, the DOF proposes for wines to be imposed only with a single specific tax of P40 per liter.

“We’re currently applying a progressive tax structure for distilled spirits. There’s no reason it can’t be done across categories in the alcohol sector or industry. We just need to look for the right balance,” said Limpe-Aw, who is also the president and CEO of Destileria Limtuaco Inc., the country’s oldest distillery.

According to Limpe-Aw, the DOF proposal would unfairly penalize low income consumers who cannot afford to buy expensive wines.

“Let’s compare: Ginebra San Miguel Gin will be sold at P94 a bottle under this proposed tax, so the tax is P32.66 or a tax burden of 34.74 percent. The most expensive wine P600,000 – the tax is only P30 per bottle, or a tax burden of 0.005 percent,” she said.

Limpe-Aw said even distilled spirit brands costing more than P20,000 per bottle would pay a higher excise tax under the current proposal.

“Let’s use P20,000 per 750 ml bottle as our base price to compare taxes: the tax per bottle for this distilled spirit is P2,996.91. That’s still more than 100-times compared to the P30 tax on a P20,000 per bottle wine,” Limpe-Aw said.

Citing industry data, Limpe-Aw said 91.3 percent of Filipinos who consume distilled spirits come from the “D” and “E” segments. She said competition among industry players is tight in this price sensitive business.

She also noted that alcohol is currently the lowest priority on household spending and continues to decrease every year. From 1.2 percent based on the 2009 Family Income and Expenditure Survey, it went down to 0.592 percent in 2015, she said.

For this reason, she said alcohol manufacturers have to find ways to lower their costs and maintain affordability of their brands.

“If you notice, our manufacturers depend on the budget of our market. Even distilled spirits hold a significant market share, we can’t dictate a higher price because of our consumers’ weak purchasing power,” Limpe-Aw said.