The government has implemented a fresh round of excise tax increases on cigarettes, vapes, and alcoholic drinks for 2026, a move that will further stretch consumer wallets while testing the administrative capabilities of the country’s revenue agencies.

In the first memorandum of the year issued by the Bureau of Customs (BOC) on Wednesday, Jan. 14, the country’s second-biggest tax-collection agency noted that specific tax rates for distilled spirits, wines, beer, and a variety of nicotine products have been adjusted upward in accordance with long-standing fiscal legislation.

The adjustments are part of a multi-year effort to bolster state revenues and curb consumption of health-impacting commodities.

Distilled spirits will now be levied a specific tax rate of ₱74.16 per proof liter, up from ₱69.96 in 2025, on top of an ad valorem tax rate equivalent to 22 percent of net retail price. Still and sparkling wines also saw their levies climb to ₱70.92 per liter from ₱66.91 last year. For the broader consumer market, the tax on beer and other fermented liquors rose to ₱48.31 per liter, compared to the previous rate of ₱45.58.

Tobacco and its modern alternatives were not spared. A pack of 20 cigarettes now carries a tax of ₱69.46, up from ₱66.15. Heated tobacco products (HTPs) saw rates rise to ₱37.63 per pack from ₱35.84, while nicotine salt and conventional freebase or classic nicotine vapor products increased to ₱60.20 per milliliter from ₱57.33.

These annual escalations are mandated under Republic Act (RA) No. 11467, signed into law in 2020, and RA 11346, enacted in 2019, which provide a predictable schedule for tax hikes on “sin” products through the middle of the decade. RA 11467 covered alcohol, e-cigarettes, HTPs, while RA 11346 also taxed traditional tobacco products.

Despite the modernization drive within the BOC, it admitted that its digital infrastructure remains insufficient for certain calculations.

For the second consecutive year, the agency’s computer systems are unable to process complex ad valorem taxes—levies based on the assessed value of an item—for distilled spirits and cigars. This technical gap forces Customs personnel to perform these computations manually, even as simpler 2025 rates remain integrated into the electronic-to-mobile (E2M) system.

The government continues to view these tax measures as a primary driver of fiscal health. Data from the Bureau of Internal Revenue (BIR) through September 2025 showed that collections from sin products reached ₱106 billion.

That figure represents a significant jump from the ₱84 billion collected during the same period in 2024, reflecting both the higher tax rates and more rigorous enforcement across the tobacco and vapor sectors.