More sin taxes govt’s priority
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Sun, 11 Aug 2019 16:16:22 +0000
The Department of Finance (DoF) will prioritize the passage of additional “sin” taxes under the Package 2 Plus B of the Comprehensive Tax Reform Program (CTRP), Secretary Carlos Dominguez 3rd said late last week.
“I want to get the ones that have revenue impact out of the way because the revenue measures we have here are to primarily fund the Universal Health Care (UHC),” Dominguez told reporters when asked about the DoF’s order of priority on the passage of the remaining proposals under the CTRP.
The Finance chief is pertaining to the Package 2 Plus B, which proposes further increase in the excise taxes on alcohol, electronic cigarettes (e-cigarettes) and vapor products to provide additional funding for the government’s UHC program.
The DoF said the Package 2 Plus B is an accompanying measure of the Package 2 Plus A, which is the recently passed Republic Act 11346 that imposes higher taxes on cigarettes and a new tax on e-cigarettes and other alternative devices for smoking.
Under the Package 2 Plus B, tax rate on alcohol products is aimed to increase to at least P40 per liter.
The DoF also wants to slap a P45 tax rate per milliliter (ml) for vapor products from P10 per ml, but a discounted rate of P31.5 per ml will be implemented for the 0.7 ml pod.
For heated tobacco, the government proposes a P45-per-pack tax rate. The same will be imposed on regular cigarette packs starting January next year.
“UHC is not going to wait so you might as well get that going first where there’s a significant impact on the revenue,” Dominguez added.
UHC will require an initial budget of P257 billion in its first year of implementation. However, the cost of the program would grow at an average of about P11 billion to P12 billion a year, amounting to a five-year total of around P1.44 trillion by 2024.
Meanwhile, Dominguez said other CTRP packages are not revenue enhancing measures but meant to clean up the system.
“I am not saying its not important but lets get the revenue measures down because UHC is the train (that) is leaving so you might as well make sure it has enough gas,” he said.
Other remaining packages under CTRP are:
• Package 1B, which seeks reforms in the Motor Vehicle Users’ Charge and the bank secrecy law;
• Package 2, which aims to reduce corporate income taxes from 30 percent to 20 percent in 10 years and rationalize fiscal incentives;
• Package 3, which would broaden the tax base of property taxes of the national and local governments, thereby increasing government revenues without increasing the existing tax rates or devising new tax impositions; and
• Package 4, which proposes the rationalization of capital income tax to address the multiple rates and different tax treatments and exemptions on capital income and other financial instruments.