Voting 184-2-1, the House of Representatives on Tuesday approved on third and final reading the bill increasing the excise tax rates on so-called sin products.
The chamber passed House Bill 1026, which covers additional taxes on alcohol products as well as heated tobacco and vapor products, a week after it was tackled and approved at the committee level.
On Tuesday, the House Committee on Ways and Means, chaired by Rep. Joey Salceda of Albay, approved the bill in just one hearing under the principle of House Rule 10, Section 48.
Salceda earlier said the government is expected to generate P32.94 billion in revenues in the first year of implementation of the bill, which is part of the Package 2 Plus B of the Comprehensive Tax Reform Program of the Duterte administration.
The Department of Finance has said revenue from fermented liquor, or beer, is estimated to reach P24.7 billion; distilled spirits, P9.2 billion; and wines, P40 million.
The revenue from additional taxes from the sin products will fund the Universal Health Care Act.
The government needs P257 billion for the first year of the implementation of UHC law in 2020.
The bill provides that beginning January 2020, an ad valorem rate of 22 percent including specific tax rates per proof liter of P30, P35, P40, P45 from 2020 to 2023 will be imposed on distilled spirits; and it will be increased by 7 percent annually starting 2024.
The inclusion of heated tobacco and vapor products is expected to generate an additional P3.2 billion in revenues.
Under the bill, heated tobacco products or the so-called e-cigarettes, will now be levied P45 per pack of 20 beginning Jan. 1, 2020, P50 in 2021, P55 in 2022 and P60 in 2023 and 5 percent yearly increase effective Jan. 1, 2024.
The bill states that for vapor products, individual cartridge, refill, pod or container of its liquid solutions or gel will now be charged P10 per 10 milliliters. If the product being sold is more than 50 ml, it will be charged P50 excise tax plus P10 per additional 10 ml.
The rates imposed on vapor products will be increased by 5 percent every year effective Jan. 1, 2024.
The measure also provides excise taxes on nicotine salt and classic nicotine from P30 to P45 from 2020 to 2023, respectively, and an additional 5 percent after 2024.