PRESIDENT Duterte has signed Republic Act (RA) 11467, or the law increasing taxes e-cigarettes and alcoholic beverages, and shared his expectation that the number of Filipinos with vices will be reduced.
Duterte late Wednesday signed the new legislation “increasing the excise taxes on alcohol, heated tobacco and vapor products and expanding the coverage of the value-added tax [VAT]-exempt sales and importation of medicine.”
He said the revenue collected from the new law will be used for the “equitable access and affordable health services to every Filipino” through Republic Act 11223, or the UHC.
The government is expected to generate P22 billion for the first year of implementation of RA 11467. Of this, 60 percent will go to UHC implementation, and 20 percent for medical aid and health facilities.
“I am confident that the multi-tiered effect of this law as a cost-effective health measure to reduce smoking and alcohol consumption among Filipinos support the UHC Act,” Duterte said in his veto message.
Vetoed provision
Duterte opted to strike down Section 5 of RA 11467 amending the National Internal Revenue Code (NIRC) by requiring the Bureau of Internal Revenue (BIR) to get a court order before it exercise its duties to “examine, search, and seize.” Said the President: “I hereby register the item veto of Section 5 of the measure, which was intended to further amend Section 152 of the NIRC, as it effectively curtails the power of the State to collect taxes and renders powerless the BIR to effectively implement enforcement mechanisms against illicit products.”
The new law, which retroactively takes effect on January 1, 2020, after being published, imposes a 22-percent ad valorem tax on top of the specific tax of P42 per proof liter for distilled spirits in 2020; while it is P47, P52, P59, P66 per proof liter from 2021 to 2024.
A 6-percent increase will then be implemented annually beyond 2024.
Specific tax for fermented products will be P35 per liter for 2020, with a P2 increase implemented annually until 2024, and a 6-percent indexation in the succeeding years.
Sparkling and still wines will have a specific tax of P50 per liter in the first year of implementation, with the rate rising by 6 percent annually in the following years.
For heated tobacco products, the reconciled specific tax for the first year is P25 per pack, to be increased by P2.50 per pack in the succeeding years until 2024. The increase starting 2024 will be 5 percent.
Vapor products will have a P37 tax per milliliter of salt nicotine in the first year and a P5 increase until 2023, and an indexation of 5 percent in the succeeding years.
Specific tax for freebase vapes will be P45 per 10 milliliters in 2020, while a P5 increase will be implemented annually until 2023, and a 5-percent indexation will be imposed thereafter.
Exempted items
RA 11467 also exempted from VAT the sales and importation of some commonly used drugs, making them cheaper to buy for the public.
The first phase of the implementation of the provision will cover drugs for diabetes, high cholesterol and hypertension on January 1, 2020.
On 2023, it will also cover drugs used for cancer, mental illness, tuberculosis and kidney disease. The new law mandates DOH to issue a list of approved drugs and medicines for this purpose 60 days after the implementation of RA 11467.
Dominguez: Decisive leadership
Finance Secretary Carlos G. Dominguez welcomed the signing into law of the bill raising taxes on alcohol and e-cigarettes, as well as the line-item veto on raid restriction.
Dominguez said the BIR will implement the new law with new rates on alcohol and e-cigarettes effective January 1, 2020, as the law stated.
“President Duterte’s decisive leadership is clearly seen once again in his signing the alcohol and e-cigarette bill into law,” he said. “His signature attests to his concern for the health of the Filipino people, while the line-item veto shows his strong resolve for strict enforcement of the law.”
The DOF chief sent a memorandum to the Office of the President in December objecting to the inserted line in the bill, particularly requiring a court order before the conduct of a raid.
With Bernadette D. Nicolas