Tobacco and Alcohol Tax Collections Down

The Bureau of Internal Revenue (BIR) will soon roll out new and improved tax stamps for cigarettes, e-cigarettes and alcoholic drinks to ensure collection of the correct excise taxes. Internal Revenue Commissioner Arnel Guballa told the Inquirer that the upcoming new stamps would have new security features as previous tax stamps could be faked, resulting in foregone revenues for the government.

With higher excise levied on heated tobacco and vaping products since the start of this year, Guballa said e-cigarettes would also soon be affixed with internal revenue stamps, although he did not give a timetable. Republic Act No. 11467 imposed an excise tax of P25 a pack of heated tobacco products in 2020 and a higher P45 per 10 mL for conventional freebase vapor products and P37 per mL in the case of salt nicotine vapes.

The latest preliminary Department of Finance (DOF) data showed that the “sin” tax take from tobacco, e-cigarettes and alcohol amounted to P140.1 billion as of end-August, down 13 percent from P161.8 billion during the first eight months of last year. From January to August, tobacco excise tax collections dropped to P95.7 billion from P111.3 billion a year ago, while those from alcoholic beverages declined to P44.4 billion from P50.5 billion a year ago.

The stringent COVID-19 quarantine from mid-March to May affected both supply of and demand for “sin” products as factories stopped production for the local market while movement of nonessential goods had been restricted, including liquor bans imposed by some local government units to discourage social drinking. At the height of the lockdown, illicit cigarette trade flourished as unscrupulous traders took advantage of dwindling availability of tax-paid sticks.

As for e-cigarettes, excise tax collections remained small, not even reaching P1 billion yet, Finance Assistant Secretary Maria Teresa Habitan said. But as quarantine restrictions eased and manufacturing gradually resumed, sin tax collections improved on a monthly basis, DOF data showed.

Sin tax collections in August rose 25 percent to P24.2 billion from P19.3 billion a year ago, despite a two-week return to stricter lockdown in Metro Manila and four neighboring provinces during the month. For 2020, the government targets to collect P203.9 billion in sin taxes—P139.1 billion from cigarettes, P64.4 billion from alcohol and P400 million from e-cigarettes.

Last year, actual tax collections from cigarettes and alcohol were a higher

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