By CHINO S. LEYCO
The Department of Finance (DOF) has asked President Rodrigo R. Duterte to veto one of the provisions under the enrolled bill on sin tax law that will raise levies on alcohol and electronic cigarettes.
Finance Secretary Carlos G. Dominguez III said they are asking the President to reject one particular provision of the bill that prohibits law enforcers to conduct raid on alcohol and e-cigarettes facilities without the court order.
“I want him to take out one line there that says we cannot raid before the court order. That can’t be passed,” Dominguez told reporters last Friday. “We cannot investigate without court order, is that okay? Let's say, their inventory is wrong? Should we allow that?”
If that provision is enacted by the President, Dominguez asked “how do we catch these guys ?”
Dominguez already submitted a memorandum asking the President to partially veto the new sin tax measure after the bill was transmitted to Malacañang last December.
If President Duterte will not act on it, the ratified measure will automatically lapse into law on January 24 and effectively raise the excise tax on alcohol products, e-cigarettes and other vapor products.
The 2019 sin tax law is expected to generate ₱22.2 billion in the first year of implementation, of which 60 percent will be earmarked for universal health care programs, 20 percent for health facilities enhancement program and 20 percent for attaining sustainable development goals.
The estimated potential revenues from the new law are below the DOF’s target of ₱47.9 billion.
Once implemented, the excise tax on distilled spirits will be increased from ₱23.5 to ₱42 per proof liter with a 22 percent ad valorem tax beginning next year.
The specific tax will then be raised to ₱47 in 2021, ₱52 in 2022, ₱59 in 2023, ₱66 in 2024, and by 6 percent every year thereafter.
Meanwhile, the tax on fermented liquors will be raised from ₱25.4 to ₱35 beginning next year. The tax will then be increased to ₱37 in 2021, ₱39 in 2022, ₱41 in 2023, ₱43 in 2024, and by 6 percent in each succeeding year.
Finally, a specific tax of ₱50 will be imposed on all wines beginning 2020, with annual increases of 6 percent every year thereafter.
For heated tobacco products, the tax would be increased to ₱25 in 2021, ₱27.50 in 2022, ₱30 in 2023, ₱32.50 in 2024, and by 5 percent every year thereafter.
For freebase nicotine vape, the tax will be increased to ₱45 in 2021, ₱50 in 2022, ₱55 in 2023, ₱60 in 2024, with 5 percent annual increases in each succeeding year, while the salt-based nicotine vape will be taxed slightly lower at ₱37 in 2021, ₱42 in 2022, ₱47 in 2023, and ₱52 in 2024, with 5 percent annual increases from 2025 onwards.