Gov't misses tobacco tax goals

By Iris C. Gonzales, The Philippine Star

Posted at Sep 25 2012 07:59 AM | Updated as of Sep 25 2012 05:55 PM

MANILA, Philippines - The government’s tax collections from tobacco products failed to meet the goal assigned to the sector the past two years, strengthening the Aquino administration’s case for higher sin taxes.

Aside from missing the targets in 2010 and 2011, excise tax collections from cigarettes also declined in 2011 from the previous year, latest data from the Bureau of Internal Revenue (BIR) showed.

Data showed that the BIR collected P31.7 billion from tobacco excise tax in 2010, 18 percent lower than the P37.4 billion goal for that year.

This declined to P26 billion in 2011, 9.4 percent lower than the goal from the tax of P28.7 billion for the period, BIR data also showed.

On the other hand, collections from excise tax on alcohol hit the respective goals in 2010 and 2011 only by a hairline.

Excise tax on alcohol products amounted to P21.8 billion in 2010, five percent higher than the goal of P22.9 billion.

In 2011, the BIR collected P22.9 billion in excise tax on alcohol, 0.9 percent higher than the P22.7-billion goal from the tax type, data also showed.

For this year, the BIR hopes to collect P71.089 billion in excise taxes including those from petroleum, mining and other miscellaneous products.

In 2010, the BIR collected a total of P67.2 billion in excise tax – including those from petroleum and the other products – and P68 billion in 2011.

Because of the lower-than-expected collections from sin taxes, the government is pushing for an increase in the tax rates and a change in the excise tax regime.

The Department of Finance (DOF) is proposing a sin tax measure that would translate to P60 billion in the first year of implementation but the House of Representatives approved in June a watered-down version that would mean P31.35 billion in incremental revenues in the first year of implementation.

In the four hearings conducted by the Senate ways and means committee, Finance Secretary Cesar Purisima and Health Secretary Enrique Ona said the Finance-backed measure would translate to more funds for the health sector and may even remove the need for the Philippine Health Insurance Corp. (Philhealth) to hike the mandatory contributions of members in the near future.

According to the measure approved by the House of Representatives, at least 85 percent of the revenues from the new sin tax measure would go to health services, including health coverage for indigents and informal sectors under the National Health Insurance Program.