BIR tobacco tax take ahead of 2020 pace after JTI expansion

THE Bureau of Internal Revenue (BIR) said it is running well ahead of its year-earlier pace on collections from the tobacco industry due to increased production volumes following an expansion by Japan Tobacco International (JTI) Philippines, Inc.

As of Feb. 18, the BIR was also above-target for the month by about 4.3%, the Department of Finance (DoF) said in a statement Sunday.

Citing a preliminary report from the BIR, the DoF said the bureau had collected P17.57 billion from excise taxes on tobacco products, exceeding the target for the month of P16.85 billion.

The tax take was 110% higher than the total collected in the equivalent year-earlier period.

In the year to date, collections hit P29.1 billion, up 73.5% from a year earlier.

BIR Deputy Commissioner Arnel SD. Guballa said the bureau collected more taxes from JTI, which had expanded its Batangas factory.

“Noticeably, we have a big increase in the collection of tobacco excises because JTI opened its plant in Batangas. So it’s in full operation... That’s also why we have quite a collection in tobacco for this month,” Mr. Guballa was quoted as saying in the statement.

He said taxes collected from JTI Philippines reached P10.94 billion in February alone, more than double the P5.25 billion it paid the month before.

JTI Philippines established a manufacturing plant in Batangas City in 2017 and expanded last year.

JTI Philippines also acquired the tobacco business of Mighty Corp. in August 2017 for P46.8 billion, adding the “Mighty” and “Marvels” brands to its lineup.

Bulacan-based Mighty shut down in July 2017 after a series of tax-evasion complaints before the Justice department due to its use of fake tax stamps. Its total tax settlement with the government amounted to P30 billion.

Recent laws raised the excise taxes on tobacco products, along with other “sin” products such as alcohol and electronic cigarettes.

The BIR is tasked to collect P2.081 trillion this year, which if achieved would be up 7% on its actual collections in 2020.

Last month, Finance Secretary Carlos G. Dominguez III said he expects the BIR will exceed its collection target in 2021 after the agency beat its downward-revised target last year, the first time targets have been exceeded in 17 years. —