House OKs bill hiking taxes on alcohol, e-cigar, vape products on final reading

MANILA, Philippines — The House of Representatives on Tuesday passed on third and final reading a bill that will gradually increase excise tax rates on liquor and heated tobacco and vapor products.

Some 184 congressmen approved House Bill No. 1026 championed by President Rodrigo Duterte’s allies, while two opposed it and one abstained. This is the first bill that got the chamber’s nod under the 18th Congress.

The approval of the priority tax bill was swift as the House committee on ways and means greenlighted it last Aug. 13, followed by the plenary’s second reading approval last Aug. 15.

READ: House approves on 2nd reading new sin taxes | House panel OKs bill on liquor tax hike

Alcohol products 

The proposed measure seeks to impose on distilled spirits by January 2020 an ad valorem tax rate of 22 percent plus specific tax rates of P35, P40, P45 from 2020 to 2022. This rate will be increased by 7 percent annually starting in 2023.

The current two-tiered system for sparkling wines will be shifted into a unitary rate of P696 specific tax and an ad valorem tax rate of 15 percent by 2020. This too will be increased by 7 percent annually starting in 2021.

The ad valorem tax on still and carbonated wines regardless of proof will be 15 percent by 2020 and an additional tax of P60 per liter.

All fermented liquors and alcopops, meanwhile, will have a P32 tax per liter by 2020. This will hike by P2 per year from 2021 to 2022. This rate will likewise increase by 7 percent every year after.

Vape products

Meanwhile, heated tobacco products will get a tax of P45 per pack of 20 units or lesser by 2020. The tax will increase by P5 every year until 2023. The tax will then be increased by 5 percent every year starting in 2024.

Vapor products with nicotine salt will be taxed with P30 per milliliter or a fraction by 2020. This will increase by P5 every year until 2023 and will further increase by 5 percent every year thereafter. Vapor products with conventional “freebase” or “classic nicotine”, on the other hand, will have a P4.50 tax per milliliter by 2020, to increase by P1 every year until 2023. The tax will increase by 5 percent every year starting in 2024.

Tobacco heating systems and electronic or mechanical cigarette devices include e-cigars and vapes.

The incremental revenues that will be generated once the bill is enacted into law will fund social services, particularly the Universal Health Care law. /je