No new tax next year- Dominguez

The Department of Finance (DOF) will not seek for new taxes next year to fund the national budget despite the expected slowdown in government revenues as the country recovers from the coronavirus-induced economic fallout.

Additional levies on certain goods deemed harmful to society, like cigarettes, which have been a reliable source of fresh revenues for the Duterte administration, are also not being considered by the DOF at this time.

“No additional tax measures are being contemplated,”   Finance Secretary Carlos G. Dominguez III  said when asked about any potential new revenue source for the Duterte Administration’s proposed P4.2 trillion national budget for 2021.

Even a much faster implementation of the scheduled excise tax increases on cigarettes under Republic Act 11346 of 2019 is also not being considered by the DOF, Dominguez said.

 Under the Tobacco Tax Law 2019, excise taxes on cigarettes will increase incrementally starting 2020.

The sin tax on cigarettes is currently at P45 per pack, but it is scheduled to increase to P50 per pack next year, and continue to rise by additional P5 in 2022 until it reaches P60 by January 2023.

Beginning 2024, the cigarette excise tax rate will also be increased by 5.0 percent each year.

RA 11346 also includes a provision taxing e-cigarettes by at least P10 per millimeter for e-juices with high nicotine concentrations, also known as nicotine salt. 

Before the Tobacco Tax Law 2019, cigarette excise taxes were first raised under the Duterte administration through the Tax Reform for Acceleration and Inclusion Act (TRAIN).

“We are the only administration that actually cleaned up the cigarette industry and raised tobacco excise taxes twice. This has never happened in any past administration,” Dominguez said.

Last May, the Development Budget Coordination Committee slashed the projected national budget for the next year as revenues are expected to take a huge hit from the coronavirus crisis.

The proposed 2021 budget of P4.2 trillion is 8.4 percent lower compared with the P4.586 trillion proposal announced in December last year.
            In 2021, government revenue projections stood P2.929 trillion, down 24 percent from the previously estimated P3.849 trillion.