BIR sees wider gap in excise tax collection

MANILA, Philippines —  The Bureau of Internal Revenue (BIR) is expecting a wider gap in excise tax collection this year amid a shift in the consumption patterns of Filipinos for sin products, particularly tobacco.

On the sidelines of the British Chamber of Commerce Philippines forum on Tuesday afternoon, BIR Assistant Commissioner Jethro Sabariaga said the gap between actual excise taxes and collection goals could be wider this year.

“I don’t think it will shrink. It will be wider because of the shift in consumption of tobacco. To date, we’re down under P10 billion in tobacco. That’s difficult to overcome,” Sabariaga told reporters.

“The better performing industries this year are automobile and sugar-sweetened beverages, but these are a small percent (in overall excise taxes),” he said.

Excise tax is a levy on the production, sale or consumption of a commodity. It contributes around 12 percent to the overall collection of the BIR.

Excisable products include alcohol, tobacco, petroleum and minerals.

Last year, excise taxes went down by 6.34 percent to P291.73 billion. This was 13 percent below the collection goal of P335.04 billion.

For 2024, the target is to collect P324.55 billion in excise taxes, up 11 percent from last year’s.

“From the preliminary data, the gap could be around 15 percent,” Sabariaga said.

This means that actual excise collection could be at P275.87 billion for 2024, five percent lower than the 2023 tax take of P291.73 billion.

“We’re doing a lot of enforcement activities to address illicit trade, but the shift in consumption is really the reason why the gap is that wide,” Sabariaga said.

Broken down, about 47 percent of the excise tax this year will come from tobacco products at P152.04 billion. This is expected to improve by 13 percent from last year’s P134.87 billion.

Even if the Cabinet-level Development Budget Coordination Committee cut the P3.055 trillion total BIR collection target for the year, the BIR official said the reduction will likely come from anticipated collections from measures that are unlikely to be passed as scheduled.

Excise on minerals is projected to jump 33 percent to P10.887 billion as the government eyes the passage of the new mining fiscal regime.

The BIR was also anticipated to get a fresh P2.334 billion from single-use plastics following the expected enactment of the excise tax on the commodity.

Unfortunately, the two measures have yet to be passed but were earlier included in the projected revenues for 2024.