Duterte signs law raising taxes on alcohol, e-cigarettes

Metro Manila (CNN Philippines, January 23) — Prices of e-cigarettes, beers, and other alcoholic drinks are bound to rise each year with a new law providing higher "sin" taxes.

President Rodrigo Duterte signed Republic Act 11467 on Wednesday, which hikes the excise taxes on alcohol and imposes new duties on heated tobacco and vapor products effective January 1, 2020.

Duterte previously tagged the bill as urgent, with the revenues to be raised meant to fund increased medical services as provided by the Universal Health Care Law.

Under the signed measure, distilled spirits like brandy, gin, vodka, tequila, and whiskey would be charged a specific tax of ₱42 per proof liter, on top of a 22 percent tax representing excise and value-added taxes. The duty will rise to ₱47 per liter next year, ₱52 per liter in 2022, ₱59 per liter by 2023, and ₱66 pesos by 2024.

For beer and other fermented liquor, the specific tax will rise to ₱35 per liter this 2020, and will add ₱2 per liter each succeeding year until 2024, according to a copy of the law obtained from the office of Senator Pia Cayetano.

Starting January 1, 2025, the specific tax for these drinks will increase by 6 percent per year. Meanwhile, the tax on wines will rise to ₱50 per liter effective this year and would add 6 percent for annually starting 2021.

Tax on vapes

The law also attached tax dues on alternative tobacco products, which are considered a counterpart of cigarette sticks.

Heated tobacco products will be taxed ₱25 per pack of 20 units starting this year, which will rise by ₱2.50 each succeeding year until it reaches ₱32.50 by 2023.

Meanwhile, vape or vapor products would be taxed depending on its content. Those with carrying salt nicotine would be taxed ₱37 per milliliter (ml) of liquid refill, and will add ₱5 each year until 2023. Those using the freebase or classic nicotine would be taxed ₱45 per 10 ml, adding ₱5 per year until it hits ₱60 per 10 ml by 2023.

Come 2024, annual increases worth 5 percent would take effect.

The President ordered the Food and Drug Administration to craft regulations that would oversee the manufacturing and distribution of heated tobacco and vapor products in the country. The law also made it illegal to sell vapes to anyone below 21 years old.

BIR raids

Duterte told lawmakers that he vetoed one provision in the sin tax bill, saying he had to remove a line that requires the Bureau of Internal Revenue to secure a court order before it can examine, raid, and seize areas where tobacco and vape products are believed to be produced or kept.

"Such restriction does not exist with respect to any other taxable article," the President said in his veto message. He added that the provision "effetively curtails the power of the State to collect taxes" and renders the BIR "powerless" in cracking down on illicit tobacco products.

Majority of the taxes raised from these measures would fund the implementation of the UGC, while 20 percent will be spent on improving public hospitals and health facilities. Another 20 percent will be allocated for the country's efforts to attain the Sustainable Development Goals set by the United Nations.

"I am confident that the multi-tiered effect of this law as a cost-effective health mesure to reduce smoking and alcohol consumption among Filipinos support the UHC Act,' Duterte said.