Sin Tax Reform Pays Off for Philippines

July 1, 2013 Taxation in Philippines

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MANILA – The Philippines is seeing a significant rise in the collection of sin tax, and the government is setting out to take extra steps to ensure that the new found revenues are not lost to smuggling and unreported sales.

In an interview given to the Philippines newspaper Inquire on June 30th the Commissioner of the Bureau of Internal Revenue (BIR) Kim Henares said that the collection of tax from the sale of tobacco and alcohol, often referred to as sin tax, over the first four months of this year rose by nearly 25 percent compared to the same period in the previous year, reaching PHP 21.75 billion.

According to the information given by the Commissioner, the reason for such a significant rise is a recent sin tax reform, leading to an increase in the taxes collected from the purchase of high strength liquors, luxury alcohol, and per-rolled cigarettes.

Last year the government estimated that the increased tax would result in overall tax collections growing by an extra PHP 40 billion per year.

However, even despite the fact that the revenue has risen, some opponents of the reform still claim that the government’s target will not be reached by the end of the year, as the tax increase will ultimately encourage more people to smuggle cigarettes and purchase alcohol on the untaxed black market.

The Commissioner countered the claims, saying the BIR is now almost ready to implement new counter measures to track the supply and sale of cigarettes in the country, minimizing the opportunity for untaxed sales.

Photo by MilitaryHealth

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