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Philippines 'Sin Tax' Revenues Up 30 Percent

by Mary Swire, Tax-News.com, Hong Kong

26 August 2014


Following the reform of "sin taxes" that took effect in the Philippines at the beginning of 2013, the collection of excise taxes on alcohol and cigarette products showed a 30 percent increase in the first six months of this year.

Bureau of Internal Revenue (BIR) statistics have shown that sin taxes yielded almost PHP46bn (USD1.05bn) in the period from January to June 2014, which was also 31.6 percent more than the budget for the period.

However, the BIR also noted that, while excise taxes from tobacco products reached PHP28bn, a 44 percent rise over the collections in the first six months of 2013 and 95 percent higher than the PHP14.5bn budget, revenue from alcohol products was well below target at only around PHP18bn. Although that was 12 percent higher than collections in the same period last year, it was 13 percent below budget.

It was pointed out that, without the sin tax law, the government would only have collected up to PHP27bn in cigarette and alcohol excise taxes in the first half of this year, or an increase of 2.25 percent above their 2013 level.

Previously-proposed structural changes to sin taxes would have immediately established a unitary rate, as against the then tiered system. Under the alterations finally agreed, with a gradual increase in tax rates, a tiered system will finally be established in 2017.

In addition to boosting government revenue, the sin tax hikes were also introduced as a health measure, and it was agreed that a proportion of the additional revenue would be allocated to the country's universal healthcare coverage program, and to district and regional hospitals and medical centers.

TAGS: tax | economics | law | budget | Philippines | excise duty | tax rates | revenue statistics

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