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New law hikes taxes on vapes, alcohol, wines; P22-billion tax seen

President Rodrigo Duterte has signed a new law imposing higher taxes on alcohol, heated tobacco and vapor products that is expected to bring billions in revenues that will be used to implement the Universal Health Care Law.

The President on Wednesday signed Republic Act 11467, which amends the National Internal Revenue Code of 1997, to impose heavier levies on alcohol products and e-cigarettes. 

About 22 billion in incremental revenue for the first year will be raised with the law signed by President Duterte, said Sin Tax Coalition co-convenor Anthony Lseachon. 

Health Undersecretary Eric Domingo, who considered the signing of the new law a “win-win” for them, said they were jumping for joy on hearing the news. 

Rep. Joey Salceda said the new law would save thousands of lives and result in the collection of billions of pesos more, which could be used by the government to implement the Universal Health Care Law in full. 

Here are the new tax rates based on the law:

• Distilled spirits such as whiskey, brandy, rum, gin, vodka: P42 specific tax (plus 22 percent ad valorem tax) in 2020; P47 in 2021; P52 in 2022; P59 in 2023; and P66 in 2024, with a 6-percent indexation thereafter.

• Wine: P50 specific tax per liter in 2020 and 6-percent yearly thereafter.

• Beer and fermented liquor: P35 specific tax per liter in 2020 and would increase by P2 per year until it reaches P43 per liter in 2024. Thereafter, the rate will increase by 6 percent every year.

• Heated tobacco products: P25 specific tax in 2020; P27.50 in 2021; P30 in 2022; and P32.50 in 2023, with a 5-percent indexation thereafter.

• Salt nicotine: P37 specific rate in 2020; P42 in 2021 per milliliter; P47 in 2022; P52 in 2023, with a 5-percent indexation thereafter.

• Conventional/Free Base nicotine: P45 specific tax in 2020 per 10 milliliters; P50 in 2021; P55 in 2022; P60 in 2023; with a 5-percent indexation thereafter.

Tuba, basi, and tapuy were exempted under the law from the higher excise taxes.

Under the law, the medicines for diabetes, hypertension and high cholesterol will be free of value-added tax.

The exemption will also apply to medicine and prescription drugs for cancer, mental illness, tuberculosis and kidney disease by 2023.

Meanwhile, the President vetoed a provision in the measure that requires “order of the court” before the Bureau of Internal Revenue can seize vapor and alcoholic products that were not properly taxed.

“The phrase ‘upon order of the court’ unnecessarily requires the BIR, in the exercise of its mandate to examine, search, and seize under Section 171 of the NIRC, as amended, to secure an order from the court before its officers may be allowed to enter any house, building, or place where tobacco, heated tobacco, and vapor products are produced or kept,” Duterte said in his veto message.

Last year, the President certified the measure as urgent, saying tax adjustments would “address the urgent need” to fund Universal Health Care.

“Coupled with its positive impact on improving domestic resource mobilization, this measure will significantly reinforce and advance this administration’s commitment to provide a better quality of life for every Filipino,” Duterte said. With Macon Ramos-Araneta 

Topics: Rodrigo Duterte , Universal Health Care Law , Anthony Lseachon
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