DoF backs further hike in sin taxes

The Department of Finance will propose to Congress a further increase in the excise taxes of the so-called sin products despite their impact on the inflation rate, Secretary Carlos Dominguez III said Friday.

“This will be submitted in the next few weeks. You’ll know what it is...just give us a couple of weeks’ time. Both the House and the Senate,” Dominguez told reporters.

Dominguez said raising the taxes on cigarettes and alcohol would make people think first before buying or consuming these products.

“First of all when you talk of sin taxes, the idea there is to raise the tax... so that less people will consume it. That’s really the purpose. It is not a necessity, cigarettes are not a necessity, and neither is alcohol,” he said.

“So we know to some extent they are detrimental to health and by making it less affordable, we hope people will consume it less and therefore less health problems and be more productive in life. So the idea is really to raise the price...,” Dominguez said.

He added raising the excise taxes was not based on the idea of increasing the revenues but to “discourage the consumption of these products.”

Dominguez also said nicotine was the “worst drug for addition.” 

“It is very difficult to break that nicotine habit,” he said.

Earlier, Dominguez said in a briefing the government would push through with its plan of further increasing the excise taxes on tobacco despite the impact on inflation.

Dominguez said receiving a negative feedback would not mean the government was going to stop increasing the sin taxes.

The Tax Reform for Acceleration and Inclusion Law took effect in January 2018 after it was signed by President Rodrigo Duterte in December last year. The law cut personal income taxes but raised the excise taxes on tobacco, alcohol, fuel, and automobiles.

Dominguez said the Department of Finance would support the proposal of Sen. Manny Pacquiao to raise further the taxes on cigarettes and alcohol.

“He has a measure in there which conforms to ours. We will support his measure. It’s not doubling the rates. I don’t really remember the exact rates. Let’s just wait for it until he files it,” Dominguez said.

Inflation in April accelerated to 4.5 percent from 4.3 percent in March, due in part to faster increases in sin products.

But DoF Undersecretary and chief economist Gil Beltran said the current spike in inflation was only temporary. He said TRAIN was a long-term measure that would push the economy to a much higher development path, create more jobs and improve the living conditions for our people.

Beltran said while inflation reached 4.5 percent in April, month-to-month inflation declined from 1.0 percent in January to only 0.5 percent in April. Year-to-date inflation was recorded at 4.1 percent, or over the upper limit of the target range of 2 percent to 4 percent.

Topics: Department of Finance , Secretary Carlos Dominguez III , President Rodrigo Duterte , Tax Reform for Acceleration and Inclusion Law
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