Sin tax collections seen at P150B in 2018

THE government aims to collect a little over P150 billion in sin taxes in 2018, as the Sin Tax Reform Law matures, the Finance department said.

Finance Undersecretary Gil S. Beltran told reporters on Thursday that the tax take from alcohol and tobacco excise taxes, or “sin taxes,” is projected at “P150.2 billion for 2018.”

“The target for this year is P143.5 billion, growing at 4.7%,” he said.

Republic Act No. 10351, or the Sin Tax Reform Law, matures by the end of this year.

The law requires sin taxes to be increased by 4% annually starting Jan. 1, 2018 through revenue regulations to be issued by the Department of Finance (DoF).

The law was enacted in December 2012, with a goal of discouraging the public from consuming “sin” products.

As of end-July, the DoF said that it collected P73.28 billion in sin taxes, up 8.67% from a year earlier.

Finance Secretary Carlos G. Dominguez III said the government will initiate the mandated review of the impact of the law next year.

“We are going to review that as mandated by law. It looks okay, but again there are issues that we have to look at,” he said.

Mr. Dominguez said smuggling may become more attractive given the yearly increases in sin taxes.

“I think now that the low-end producers are out of the process prices will rise. You know what will happen when prices rise, people will be incentivized to smuggle,” he added.

“I told [the Bureau of Customs], that is something you have to watch because you know already prices will go up, there are cheap producers in other countries and they will try to smuggle it here,” Mr. Dominguez said.

The review of the law will also be in conjunction of its preparation for the health package of the Tax Reform for Acceleration and Inclusion (TRAIN).

“People were saying why don’t we include it now, I said you know actually the process we should let this thing run until the end of 2017 and then take the data there then review it. No sense jumping ahead of the TRAIN,” he said.