2018News

Alcohol tax hike hurdles House committee on 2nd reading

By Charmaine A. Tadalan, November 26 2018; Business World

https://www.bworldonline.com/alcohol-tax-hike-hurdles-house-committee-on-2nd-reading/

Image Credit to Philippine Star

A BILL imposing higher excise taxes on alcohol products was approved on second reading at the House of Representatives on Monday.

House Bill 8618, approved by voice vote, is expected to generate P60 billion within five years of implementation.

The measure will generate “P60 billion for five years, P7 billion for the first year,” House Ways and Means Committee Chair Estrellita B. Suansing told reporters in a chance interview after the hearing on Monday.

She noted that revenue from the measure will also be used to fund the proposed Universal Health Care (UHC) act. “Everything will go to the UHC,” Ms. Suansing confirmed.

The bill provides for distilled spirits to be levied a 22% ad valorem tax on the net retail price (NRP) per proof from the current 20%, in addition to a specific tax of P30 per liter in 2019, up from P23.40. The specific tax rates will be increased to P35 in 2020, P40 in 2021, P45 in 2022 and shall increase by 7% annually beginning 2023.

The Committee Report on House Bill 8618 noted the annual increase of specific taxes was raised to 7% from 4% “to account for inflation.”

The measure also proposed to levy a 15% ad valorem tax per liter, which is currently not imposed; and a P650 specific tax per liter for Sparkling Wines in 2019, which shall increase by 7% annually, regardless of price. This compares with the present system of a P316 per liter tax on sparkling wines costing P500 or less per 750 ml bottle in 2019, with an P885.7 per liter levy on bottles costing more than P500.

For still wines and carbonated wines with 14% alcohol or less, the excise tax will be increased to P40 per liter in 2019 from P37.9, which shall also increase by 7% every year beginning 2020.

Still wines and carbonated wines with more than 14% alcohol, meanwhile, will be taxed P80 per liter in 2019 with an annual 7% increase thereafter. Currently, taxes on still wines with more than 14% alcohol are as follows:

• P75.9 per liter in 2019 for still wines with 14% to 25% alcohol per liter of volume capacity

• P23.4 per liter in 2019 for fortified wines or still wines with more than 25% alcohol per liter of volume capacity.

For fermented liquors, the excise tax will rise to P28 per liter from P25.40 in 2019;. It is scheduled to increase to P32 in 2020; P34 in 2021; and P36 in 2022. It was provided also that the rates will be increased by 7% every year beginning 2023. — Charmaine A. Tadalan

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