Philippines Approves Hike to Sin Tax

December 12, 2012 Taxation in Philippines

Cigarettes and alcoholMANILA – Taxpayers in the Philippines will soon feel a sting in their wallet as the government narrowly approves the long debated and strongly contested hikes to the taxes levied on alcohol and tobacco.

At a meeting of the Senate of the Philippines on December 11th a vote was held on the future of the hotly debated “sin taxes” on cigarettes and alcohol, passing the long discussed measure and approving several rounds of hikes to the excises taxes on both types of products.

From January 1st 2013 excise duties on all alcoholic beverages and tobacco products will be increased, with further rises scheduled at the start of each year until 2017.

The raised tax rates will be broken down by product types, with higher strength liquors and more luxurious drinks having higher taxes than cheap low-strength alcohols, while high-priced and pre-rolled tobacco products will be levied at a higher rate than loose leaf tobaccos or low cost products.

The government aims to raise an additional PHP 24 billion of tax revenues from the excise hikes on cigarettes and tobacco products, while a further PHP 16 billion will be collected from the hike to alcohol duties.

The tax hikes were passed by the Senate with 10 votes in favour and 9 votes against, with 4 Senators not present on the day of the vote.

The main points of opposition raised by Senators voting against the measure were that the measure may harm the national tobacco industry and may not serve to increase the health of taxpayers.

Photo by maartmeester