Congress proposes lower increase in alcoholic tax

Sin taxes imposed on alcoholic beverages will increase next year but the rates are lower than the proposal submitted by the Department of Finance (DOF) to the House of Representatives.

The House ways and means committee’s technical working group (TWG) approved yesterday the proposed increase in excise tax rates for distilled spirits and fermented liquors, commonly known as “alcoholic beverages.”

Based on the documents obtained by reporters, the TWG adopted that excise tax on distilled spirits be raised to 130 per proof liter beginning next year from the original 123.4. This, however, is lower than DOF’s proposed 140.

For 2020, the TWG agreed that the levy should be at 135 per proof liter, instead of only 124.33, but this is still below the 145 proposal of the DOF.

For following year and in 2022, the lawmakers also approved excise tax rates of 140 and 145, respectively from 125.3 and 126.32. The DOF had wanted rates of 150 and 155 per proof liter during the two year period.

The DOF also failed in its ad valorem rate proposal of 25 percent, as the TWG approved only 22 percent.

Meanwhile, the TWG also submitted new excise tax rates schedule for fermented liquors, which are also not aligned with the DOF proposals.

In 2019, the House lawmakers agreed on a 128 per liter levy, instead of the DOF’s 140 proposal. This, however, is slightly higher than the present 125.42.

For the following year, the rate will increase to 132 per liter, before hitting the 136 level in 2020, 136 by 12021 and ultimately, 140 in 2022.

The scheduled annual increase, however, is below the DOF’s 140 for next year, 145 for the following year, 150 in 2021, and 155 in 2022.

The finance department’s proposed annual increase starting 2023 of 10 percent also failed to get the congressional nod. The TWG adopted a seven percent yearly increase after four-years since the effectively of the new rates.