The Philippine Department of Finance, following opposition to its proposed text messaging tax, is considering higher "sin" taxes on cigarettes and alcohol instead.
Underlining that there was an urgent need to counteract current falling tax collections, the Philippine government has said that it would applaud the passing of any tax measure that produced additional revenue. However, now that the proposed tax on text messaging has encountered difficulties in the Senate, the government will instead promote the sin tax bill more vigorously in the House of Representatives.
The existing tax law on excise rates on alcohol and cigarette products has a four-tier system that is not indexed to product prices, and relies on the year the product was introduced to establish the relevant rate of duty.
The government is now proposing a unitary system that abolishes the present unequal taxation of different products. Under the new bill, there would be one rate of excise duty for cigarettes, as well as for each category of alcoholic drinks.
According to reported government estimates, the proposed higher sin taxes could raise from PHP20bn (USD415m) in the first year to up to PHP60bn in the fourth year of their operation.
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