By Chino S. Leyco
The proposed increase in sin tax on alcoholic beverages will help close the funding gap in the government’s universal health care (UHC) program and reduce its excessive consumption, the Department of Finance (DOF) said yesterday.
Based on the DOF’s estimates, the excise tax hike on alcohol products, which is under the Senate Bill (SB) No. 2197, will raise almost P237 billion in revenues over a five-year period.
According to the DOF, SB-2197 authored by Senator Emmanuel Pacquaio, once passed into law, will generate around P32.2 billion on its first year of implementation, and another P40 billion the following year.
The projected revenues will further rise on its third-year with P47.4 billion, another P54.6 billion on its fourth-year, and, ultimately, P62.4 billion on its fifth year.
For this reason, the DOF said “increasing the excise tax levied on alcohol products will help close the P40 billion funding gap in the universal health care (UHC) program.”
The DOF also assured that the inflationary impact of increasing the excise tax on alcohol products under the Pacquiao bill would be minimal, or only 0.1 percentage point.
Health Undersecretary Rolando Domingo, meanwhile, said that higher alcohol excise taxes would help curb binge drinking, which often leads to vehicular accidents and the commission of crimes.
Pacquiao, who has also filed a bill increasing the excise tax on tobacco products, said the World Health Organization (WHO) has identified alcohol as being “responsible for one in 20 deaths.”
The senator also said “that the cause of more than 200 health conditions, numerous cases of sexual and drug abuse, suicide, violence, and accidents are linked to alcohol intoxication.”
Citing Department of Health (DOH) data, Pacquiao said “there were 2,690 transport and vehicular crash-related injuries that were alcohol-related” in 2015.
Aside from increasing excise taxes on alcohol products, Pacquiao’s bill also seeks to further hike the tax rates by 10 percent annually to account for inflation and income.
The bill also removes the distinction on whether fermented liquors are brewed and sold in microbreweries and pubs or in factories for simpler tax administration.
Under SB 2197, an ad valorem tax equivalent to 25 percent of the net retail price (excluding the value-added tax and excise tax) per proof and a specific tax of P40 per proof liter will be imposed on distilled spirits starting 2019.
The specific tax will increase by P5 per proof liter every year thereafter until 2022. Starting 2023, the specific tax will be increased by 10 percent every year.
Pacquiao’s bill also proposes a tax on sparkling wines and champagne of P335 for those costing P500 or less per 750 ml bottle and P937 for those costing more than P500.
Still wines and carbonated wines containing 14 percent alcohol or less will be taxed P40 per bottle, while those with more than 14 percent but not more than 25 percent alcohol by volume, will be taxed P80.
The tax rates for wines will increase by 10 percent every year thereafter effective 2020.
Fortified wines containing more than 25 percent of alcohol by volume will be taxed as distilled spirits.
For fermented liquors, the tax shall be P40 per liter, regardless of where they are sold or manufactured in 2019, and will increase by P5 per liter until 2022. The tax rates will then be increased by 10 percent every year thereafter under the Pacquiao bill.