DOF wants taxes on alcohol raised by 2020

The Department of Finance (DOF) wants the planned increase in the levies imposed on alcoholic beverages to be implemented beginning 2020.

Based on the DOF proposal, the government wants the bill aiming to slap higher excise taxes on distilled spirits or the so-called “hard drinks,” wines, and fermented liquors including beers to be passed into law within next year.

Under the DOF proposal, the present ad valorem tax of 20 percent on distilled spirits will increase to 25 percent beginning 2020, while its specific tax per proof liter will rise to 140.

An annual increase of 15 per proof liter of distilled products is also being proposed by the finance department between 2021 and 2023.

For wines, the DOF wants the excise tax be imposed by the liter covering sparkling wines or Champagnes as well as still and carbonated wines.

Based on the DOF document, the sparkling wine products with retail prices of not more than 1500 per liter, the excise tax will be at 1334.59, while those priced above 1500 per liter will be taxed 1936.82.

A yearly increase of 10 percent beginning 2021 onwards is being also proposed for all varieties of sparkling wines being sold in the Philippine market whether locally produced or imported.

For still and carbonated wines, the finance department wants the excise tax rate be pegged to their alcohol content.

Bottles containing 14 percent alcohol or less, the excise tax will be at 140.15 by 2020, while those with 25 percent or less are levied at 180.31.

Meanwhile, still and carbonated wines with more than 25 percent alcohol content will be taxed as distilled spirits—ad valorem and specific taxes.

Like sparkling wines, the excise tax rate on still and carbonated will increase by 10 percent annually beginning 2021 onwards once the DOF proposal is adopted by Congress.

For fermented liquors, or beer products, the DOF wants to raise its excise tax per liter to 140 by 2020, and a yearly increase of 15 from 2021 to 2023.

To protect the government’s excise tax rates from being eroded by inflation in the future, the DOF is proposing a 10 percent yearly increase on the levies starting 2024 onwards.

The planned increase in excise tax of alcoholic beverages is part of the DOF’s tax reform package two-plus, which also covers cigarette manufacturers and importers.

Finance Assistant Secretary Antonio Joselito G. Lambino II said the government expects around 161.3 billion in additional revenues once taxes from cigarettes and alcohol are raised beginning 2020 and another 177.6 billion the following year.

Finance Sececrtary Carlos G. Dominguez III, meanwhile, said that 70 percent of the government’s annual revenue take from sin products comes from tobacco while the remaining 30 percent is from alcoholic beverages.

Dominguez said the government wants to keep the 70:30 revenue share ratio as in.