The Department of Finance (DoF) said that it expects up to P51.41 billion in revenue to be generated from the proposed reform for the excise tax on tobacco and alcohol products.

In a document from the DoF, the finance department believes it necessary to push for the passage of the reformed excise tax on alcohol and tobacco products to correct the weaknesses of the Republic act 9334.

Estimates released by the DoF showed that adopting a unitary and specific tax rate on tobacco and alcohol products would bring in fresh revenues of P19.7 billion in 2011.

The annual excise tax take would further increase by P47.23 billion in 2012 and P51.41 billion in 2013.

But the DoF said starting 2014, 2015 and 2016, revenues from excise tax would decline to P49.92 billion, P47.25 billion and P44.95 billion, respectively.

The DoF believes that pursuing the reform under the unitary and specific tax rate is better for the following reasons: a) serves the objective of ensuring that the same direction of reform is maintained for both the tobacco and alcohol excise taxes; b) allows greater flexibility on the part of government to restructure the exise taxes in such manner that is acceptable to the industry players without necessarily compromising the revenue objective of the reform; and c) a single bill is more manageable in terms of shepherding the reform to ensure that any proposed changes to the DoF proposal will not compromise the revenue objective of the reform.

The reform stemmed from what the DoF pointed out as weaknesses of the current multi-tiered system which is prone to downshifting/misreporting of consumption from high-priced and high-taxed brands to low-priced and low-taxed brands resulting in lower revenues.

The DoF emphasized that there is a need to reform the current excise structure in order to align tax rates with that of neighboring countries as the Philippines has the lowest excise tax rates among Asian countries.

source: mb.com.ph

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