ANYWHERE from P20 billion to P24 billion yearly is the expected yield from the higher rates for so-called sin taxes on alcoholic beverages, heated tobacco products and vapor products which the Senate, working late into Monday night, passed on third and final reading to help bridge the funding gap for implementing the Universal Health Care (UHC) law.
This is on top of the more than P100 million being collected from taxes such sin products.
President Duterte earlier certified as urgent SB 1074, to allow lawmakers time to pass it within the last few days of sessions before Congress takes its holiday recess starting December 18.
The Department of Finance (DOF) earlier projected a funding gap of P63 billion in the first year of implementation of the UHC law.
The senators took the final 20-zero vote on third reading on the higher sin taxes after closing the period of amendments on Senate Bill 1074, authored by Sen. Pia Cayetano, who chairs the Ways and Means committee.
After Monday night’s voting, Sen. Panfilo Lacson gave an estimated yield of from “P22 billion or P23 billion” in additional revenue from the higher excise tax rates, juxtaposing this with “the sponsor’s P43 [billion] and the DOF version of P32 billion and against the HOR’s [House of Representatives] P16 billion.”
Before adjourning the late-night session, senators confirmed the composition of the Senate panel in the bicameral conference committee that the Senate and the House of Representatives will convene to reconcile conflicting provisions in their versions of the amended sin tax law.
To be chaired by Cayetano, the bicameral panel will also have as senator-members: Senate President Pro Tempore Ralph Recto, Minority Leader Franklin Drilon, and Senators Imee Marcos, Joel Villanueva and Francis Tolentino.
More expensive spirits
In the approved Senate version, P26 will be the specific tax for distilled spirits and alcopops in 2020 plus 50 percent of the net retail price (NRP). By 2021, the specific tax will be P30 plus 50 percent NRP. It will be adjusted to P33 plus 50 NRP in 2022; P37 and P41 plus NRP in 2023 and 2024, respectively.
For sparkling wines, the measure seeks to impose a specific tax of P50 for 750-milliliter bottle with a NRP of P500 or more beginning next year. By 2021 onwards, the P50 rate will be increased annually by 6 percent.
For still wines and carbonated wines, the same P50 specific tax rate will be imposed next year, and it will have a 6-percent increase beginning 2021.
In the case of fermented liquor, a specific tax rate of P35 per liter will be imposed next year, and it will have a yearly P2 per liter increase until it reaches P43 in 2024. By 2025 onwards, it will have an annual increase of 6-percent.
The Senate version adopted the amendments made by Senate President Pro Tempore Ralph Recto on the excise tax rates of heated tobacco products (HTPs), imposing P22.50 per pack next year, P25 in 2021, P27.50 in 2022 and P30 in 2023.
From 2024 onwards, the P30 excise tax rate for HTPs will have an annual increase of 5 percent. For vape products, proposed rate is P45 per 10 milliliter and the rate is to increase by P5 per year until it reaches P60 in 2023.
By 2024 onwards, the P60 tax rates will be increased annually by 5 percent under SB 1074.
Vape taxed like tobacco
The measure will have vape products in the same tax rates as conventional tobacco products which will have a P45 per pack excise tax next year.
Senators moved to scrap the proposed imposition of excise taxes on the tobacco heating systems and vapor products device as they viewed this difficult to implement administratively.
Amendments also introduced during Wednesday night’s deliberations include the imposition of higher penalties to those who will engage in illicit trade of HPTs and vape products.
The penalties will be 10 times higher than what is provided in the existing laws, or from P50,000 to P500,000 and imprisonment of two years to four years.
Senators also included a provision restricting the selling of vape products to those 21 years old and below.
The approval came less than a month after Duterte certified the immediate enactment of the measure, citing the urgent need to generate additional revenue to support the effective implementation of Republic Act 11223, or the Universal Health Care (UHC) Act that he signed into law last February 20.