House oks alcohol tax bill; tobacco, vape tax hike inserted

Published August 14, 2019, 10:11 PM

by Ellalyn De Vera & Richa Noriega

By Ben Rosario

The House of Representatives last night approved on second reading the bill proposing to impose higher excise taxes on alcohol products that contained allegedly “smuggled provisions” on cigarettes, vapor products and similar non-alcohol products.


A substitute version of House Bill 1026 contained provisions on non-liquor, non-alcohol allegedly smuggled into the bill.

Albay Rep. Joey Sarte-Salceda, chairman of the House Committee on Ways and Means, claimed responsibility for the substitution but pointed to the Rules Committee as the author of the substitute measure.

Cagayan de Oro City Rep. Rufus Rodriguez, a member of the House panel, said the ways and means panel never discussed any provision referring to tobacco products.

“These are extraneous provisions that were never discussed during the floor debates or by the committee on ways and means that approved the bill,” complained Rodriguez, referring to the allegedly inserted provisions.

However, Rodriguez’s plea to stop the voting until the “extraneous provisions” are fully discussed failed as Deputy Speaker

Quezon City Rep. Jesus “Bong” Suntay also noted that one of the inserted provisions dangerously allows warrantless searches by internal revenue officers tasked to investigate hoarding of tobacco products.

Suntay noted that under Section 152, internal revenue officers are allowed to enter any house, building or place where articles subject to tax are being kept.

The neophyte lawmaker proposed the insertion of the phrase “upon order of the court” for such searches, saying that the amendment is “consistent with the basic tenets of human rights.”

Salceda accepted the amendment.

The ways and means panel chairman also responded positively to the proposed amendment raised by Albay Rep. Edcel Lagman who noted that the original bill gave the Philippine Health Insurance Corporation (PhilHealth) exclusive privilege to spend 80 percent of the collected revenues on tobacco and alcohol in order to finance the implementation of the Universal Health Care Act of 2019.

In the amendment, PhilHealth was deleted.

Lagman also offered a clarification of the definition of “alcopops” which under his amendment refer to “pre-mixed and ready to drink alcoholic beverages with alcohol content of less than 10 percent by volume and which alcohol is from malt or wines or a distillation process.”

Alcopops include “alcomixes, coolers, spirit coolers, wine, coolers, cruisers and breezers.”

Under the approved bill, tax imposed on alcopops and fermented liquors shall be 34 percent per liter effective January 1, 2022 and increased by four percent every year thereafter on January 2023.

The legislative measure also provides for a P45 excise tax per pack of 20 units on heated tobacco products starting January 1, 2020. The imposable tax increases up to P60 by January 1, 2023.

Sale of heated tobacco products at a price lower than the combined excise and value added taxes imposed under the law is prohibited and punishable with a fine of not less than P200,000 or more than P500,000 and an imprisonment for a period of four to six years.

For vapor products that will include nicotine salt/salt nicotine and conventional: freebase” or class nicotine, the imposable excise tax starts January 1, 2020 at P30 for each milliliter, higher than the current P10 per 10 ml.

A five- peso increase will be imposed for each year until 2023.

HB 1026 seeks to amend Sections 141, 142, 143, 144, 147, 150, 152, 263 and 265 and adds Section 290-A to Republic Act 8424 or the National Internal Revenue Code.

Speaker Alan Peter Cayetano pushed for the swift approval of the measure in response to President Duterte’s State of the Nation Address calling for higher excise tax rates on alcohol products.

Under HB 1026 excise tax imposed on distilled spirits an additional ₱6.60, compared to what is implemented under Republic Act 10351 or Excise Tax Reform Law on alcohol and tobacco.

RA 10351 imposes a P22.40 specific tax and an ad valorem tax of 20 percent on distilled spirits.

Salceda’s bill provides that starting January 2020, an ad valorem rate of 22 percent including specific tax rates per proof liter of P30, P35, P40, P45 from 2020 to 2023 will be imposed on distilled spirits.

The rates will be increased by 7 percent annually starting 2024, it said.

The House panel also approved a shift to a unitary rate of P650 plus ad valorem of 15 percent for sparkling wines, compared to the two-tiered system under RA 10351. It will be increased by 7 percent annually starting 2024.

The bill also exempts from excise tax cooking wines with salt contents of not less than 1.5 grams for every 100 milliliters.

It also increases the tax on still and carbonated wines with lower than 14-percent alcohol content by P2.10 (from P37.90 to P40).

While those with alcohol content higher than 14 percent saw a P4.10 increase effective January 2020. It will be increased by 7 percent every year thereafter.

The panel approved the P28 tax rate on fermented liquors, which is P2.60 higher than the P25.40 tax rate mandated by RA 10351. It will be increased by 7 percent every year thereafter.