DOF raises ‘sin’ tax revenue goal due to implementation of TRAIN

The Department of Finance (DOF) raised its projected revenues from the so-called “sin” products following the implementation of the first tax reform law that imposed higher levy on cigarettes.

Based on a document submitted to the DOF, the Bureau of Internal Revenue (BIR) is expected to raise R162.75 billion this year from taxes on alcoholic beverages and tobacco products.

The latest target for the BIR is higher by 7.6 percent compared with the original target of R151.17 billion set under the 2018 Budget of Expenditures and Sources of Financing (BESF) program.

According to the DOF data, excise tax on cigarettes would reach R111.59 billion this year, up 15 percent from R97.13 billion.

The additional expected tax revenue from cigarettes was owing to the R1.3 per pack increase in excise tax rate on tobacco under Republic Act 10963, or the Tax Reform for Acceleration and Inclusion (TRAIN) law.

From the original tax rate of R31.2 per pack, excise tax on cigarettes is now at R32.5.

Meanwhile, the DOF is expecting a much lower revenue from alcoholic beverages.

Based on the DOF data, excise tax on alcohol would reach R51.16 billion this year, lower than the original projection of R54.04 billion.

The lawmakers did not include the proposed additional increase in excise on alcohol in the TRAIN law.

However, DOF is planning to further tighten the monitoring of the excise taxes being paid by manufacturers as well as importers of distilled spirits and alcoholic drinks by affixing tax stamps, similar to that on cigarettes.

Finance Secretary Carlos G. Dominguez III earlier said that the implementation of the Internal Revenue Stamps Integrated System (IRSIS) on alcoholic drinks would likely begin in early this year.

BIR Commissioner Caesar R. Dulay said the upcoming implementation of IRSIS for alcohol and distilled spirits would “ensure the collection of correct excise taxes on distilled spirits and wines as well as curb illicit trade of alcohol products in the country.”

Earlier, the Duterte administration’s economic team raised the BIR’s collection target this year following the enactment of the first tax reform law.

Dulay said that the DOF expects the government’s main tax agency to raise a record R2.039 trillion this year, higher by 1.7 percent compared with its original target of R2.005 trillion.

In July last year, President Rodrigo R. Duterte submitted to Congress his proposed national budget for this year and pegged BIR’s revenue collection at R2.005 trillion.

Dulay, meanwhile, explained the new revenue collection goal approved by the inter-agency Development Budget Coordination Committee (DBCC) in December was a “tentative” figure.