“SIN” tax collection from alcohol and tobacco products as of end-April dropped by 57.1 percent to P30.6 billion, a decline mainly attributed to the lockdown and the liquor ban imposed amid the Covid-19 pandemic.
Citing data on excise tax collections based on volume of removals from the Bureau of Internal Revenue, Finance Undersecretary and Chief Economist Gil Beltran said on Wednesday that the collection for January to April this year is down by P40.6 billion from P71.2 billion in the same period in 2019.
There were no collections from e-cigarettes during the period, Beltran said.
“I think it is indeed very disappointing that revenues were down this year but we expect that we will recover in future years,” he said in a virtual forum hosted by Covid-19 Action Network.
Asked where the government attributes the decline in sin tax collections for the period, Beltran replied: “First of all, the lockdown did not enable the manufacturers to get the workers to work. Second, during the lockdown, you cannot sell cigarettes. They were prohibited from transporting those products during the lockdown. Mainly the lockdown was imposed on non-essential items, and cigarettes and alcohol are non-essential items.”
Broken down, tobacco suffered the biggest hit as it posted a year-on-year decline of 64 percent to settle at P16.9 billion during the first four months of the year. This is way below the P46.9 billion collected from tobacco products in the same period a year ago.
Excise tax collections from alcohol declined by 43.6 percent as of end-April to P13.7 billion from last year’s P24.3 billion.
Of the P13.7 billion collected from alcohol products, P10.7 billion was collected from fermented liquors and P3 billion was taken from distilled spirits.
During the same period last year, the government collected P18.4 billion for fermented liquors and P5.7 billion from distilled spirits.
For April alone, sin tax collections from alcohol and tobacco products plummeted by about 100 percent to 0.2 billion from P18.1 billion in the same month last year due to the imposition of the enhanced community quarantine and liquor ban.
April collections on tobacco amounted to P0.1 billion, sinking by 98.9 percent from P12.4 billion in April 2019.
Meanwhile, excise tax take on alcohol only reached 0.02 billion, falling by 99.6 percent from P5.7 billion in April 2019.
The amount collected for fermented liquors during the month was only P0.01 billion, 99.9 percent lower than the P4.4 billion recorded last year.
For the same period, only P0.02 billion was drawn from distilled spirits, plunging by 98.6 percent from April 2019’s P1.3 billion.
From January to April this year, the volume of removals for cigarettes also declined by 72 percent to 376.3 million packs from 1.343 billion packs a year ago.
Meanwhile, alcohol removals dropped by 50 percent.
The volume of removals for fermented liquors for the four-month period sank by 49.6 percent to 362.8 million liters. This was way below last year’s 719.8 million liters.
On the other hand, distilled spirits showed a 51.8-percent decrease to 71.5 million proof liters from 148.2 million proof liters in January to April 2019.
For April, the volume of removals of sin products declined by about 100 percent this year, also due to the lockdown and liquor ban.
For cigarettes, the volume of removals went down by 99.2 percent to 3 million packs from 355.5 million packs in the same month in 2019.
Likewise, fermented liquors also posted a 99.9-percent decline to 0.2 million liters, while distilled spirits recorded a 95.74-percent drop to 1.4 million proof liters. This is way below April 2019’s 174.2 million liters and 32.5 million proof liters, respectively.
For this year, the government expects to collect P13.2 billion in incremental revenues from sin products, based on the new projections by the Cabinet-level Development Budget Coordination Committee.
For 2021 and 2022, incremental revenues from sin products are seen to reach P28.1 billion and P31.7 billion, respectively.
Overall, the government projects to collect P73.1 billion in total incremental revenues from 2020 until 2022.
This was down from its previous estimates of total incremental revenues for 2020 to 2022 of P137.3 billion.
Previously, the government estimated that total incremental revenues would reach P37.1 billion in 2020, P46.9 billion in 2021 and P53.3 billion in 2022.
Deducting the value-added tax exemption on medicine, the new projections on net incremental revenues from sin products will be P6.4 billion in 2020, P22.7 billion in 2021 and P26 billion in 2022, or a total of P55.1 billion. This was a reduction from the previous estimates of P31.9 billion in 2020, P41.5 billion in 2021 and P47.6 billion in 2022, or a total of P121 billion.
“The revised estimates take into account the impact of the extended ECQ [enhanced community quarantine] and GCQ [general community quarantine], liquor ban and the overall decline in the demand for non-essential products or unhealthy products like alcohol and tobacco. We also consider the preliminary impact of actual excise collections from alcohol, e-cigarettes and tobacco from January to April 2020,” Beltran said.
Image credits: Alysa Salen
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