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Govt collects at least P41.8B in 'sin' taxes in 2008


MANILA, Philippines - The government estimates that it collected at least P41.8 billion worth of taxes on tobacco and alcohol products last year, based on preliminary Finance department data. The estimated collection last year, running up to November, is slightly short of the P42.16 billion collected on these so-called "sin" products for the entire 2007. The Finance department had raised target "sin" tax collections at P47 billion last year from P45 billion in 2007. The department believes collections last year could still be higher, as cigarette and alcohol firms may have frontloaded their payments last month to avoid paying a higher tax rate scheduled this month. Tax rates are programmed to rise across-the-board by six percentage points for all classifications of cigarettes and eight percentage points for liquor. "That [P41.8 billion] is an estimate. It [actual collection] may be greater due to frontloading [of payments] in December. Our actual figures are up to November only," Finance Under Gil S. Beltran in a telephone interview. Republic Act 9334, signed into law in 2004, mandates tax increases on alcohol and tobacco products beginning January 2005, and every two years thereafter, until 2011 to discourage people from consuming so-called "sin" products. This means that tax rates on these items would go up in 2005, 2007, 2009 and 2011. Cigarette and liquor were subdivided into various classifications with corresponding tax rates. Mr. Beltran said the department expects "sin" taxes to increase by only P500 million this year, as advance payments made by liquor and cigarette companies would be reflected in the 2008 collections. He estimated that around P2.5 billion worth of "sin" tax payments may have been front-loaded last year. House of Representatives Oversight Committee Chairman Rep. Danilo E. Suarez of Quezon has filed two measures seeking to increase the taxes on cigarettes and alcohol. House Bill 3759 seeks to remove the four-tiered tax classification of cigarettes packed by machine by imposing a uniform tax rate of P14 per pack, whether locally made or imported. The tax will be adjusted two years after the bill becomes law and every year thereafter, pegged against the inflation rate. House Bill 3787 seeks to do the same to alcohol products. The Finance Department has expressed support for the measures saying this would generate additional revenues by simplifying tax administration. But House ways and means committee chairman Rep. Exequiel B. Javier of Antique said measures that raise taxes should not be discussed amid a global economic slump. His vice-chairman, Camarines Norte Rep. Liwayway P. Vinzons-Chato, herself a former chief of the Bureau of Internal Revenue in the early- to mid-’90s under former President Fidel V. Ramos, has backed the measures, together with House Speaker Prospero C. Nograles. "For the sectors that we are encouraging, that [not raising taxes during an economic slowdown] is true," Mr. Beltran said. "But cigarettes and alcohol, which are harmful to the health, should not be given preferential treatment. They are not the industries we are promoting," he stressed.
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