Sin tax collections slows down in April

The growth of government revenues from the so-called “sin” products slowed down in April this year due to weak tax payments of cigarette manufacturers, the Department of Finance (DOF) reported Thursday.

According to the finance department, sin tax collection of the Bureau of Internal Revenue (BIR) grew only 1.09 percent in April this year to 18.89 billion from 18.79 billion in the same month in 2015.

BIR Commissioner Kim S. JacintoHenares attributed the slowdown on the implementation of the Graphic Health Warning Law.

“Tobacco manufacturers are slowing down production because they haven’t sold out their cigarette packs with no graphic health warnings, which are already in the market,” Jacinto-Henares said.

Tax revenue from tobacco amounted to 14.88 billion, lower by 12 percent compared with the 15.54 billion a year ago.

But taxes paid for distilled spirits, increased 20 percent to 11.17 billion from 1970 million in the same month last year, while excise tax income from fermented liquors reached 12.84 billion, up 24 percent year-on-year from 12.28 billion.

Against target, tax collection from tobacco products increased 6 percent, while distilled spirits exceeded by 34 percent, and fermented liquors saw a 19 percent excess.

During the month, volume of withdrawals of cigarettes fell 25.8 percent, while fermented liquors and distilled spirits grew 14.6 percent and 15.8 percent, respectively.

In the first-four of the year, total sin tax collections of the BIR reached 135.5 billion, still above the 132.58 billion target for the period by 9 percent.

Of the total, tobacco products contributed 119.8 billion in revenues, exceeding the target for the period by 1.3 percent, while fermented liquors surpassed the 19.56 billion goal by 20.5 percent to 111.52 billion.

Distilled sprits also exceeded its target by 20 percent to 14.21 billion in January to April this year. Year-on-year, government’s sin tax collection grew 16 percent from 130.47 billion in the first four-months of the year.

Finance Secretary Cesar V. Purisima said sin tax collections have consistently posted robust growth figures and exceeded targets since implementation, expanding government’s sustainable health financing capacity for the longterm. “This is a concrete example of how reform can break fiscal constraints to investing in our people,” Purisima said in a statement.

“The sin tax reform of 2013 is a touchstone of synergistic public policy serving both our fiscal and health priorities. I look forward to seeing improving collections and healthier collections in the next six years and beyond,” he added.