MANILA, Philippines – President Rodrigo Duterte has signed into law a measure imposing additional excise taxes on alcoholic beverages and e-cigarettes starting January 2020.
Executive Secretary Salvador Medialdea confirmed the signing of the Sin Tax Bill on Thursday.
A copy of the law, released by the office of Senator Pia Cayetano who handles tax-related measures as Senate Ways and Means Committee chairman, showed Duterte signed Republic Act 11467 on Wednesday.
The new law is set to generate around P24.9 billion in revenues for the government, which will be used for the implementation of the Universal Health Care program, Health Facilities Enhancement Program of the Department of Health and programs seeking to attain the country’s Sustainable Development Goals.
Here are the new tax rates based on the new law:
-Distilled spirits: P42 specific tax rate (plus 22 percent ad valorem tax) in 2020; P47 in 2021; P52 in 2022; P59 in 2023; and P66 in 2024, with a 6 percent indexation thereafter.
-Wine: P50 specific tax rate per liter in 2020, and will increase by 6 percent yearly thereafter.
-Fermented liquor: P35 specific tax rate per liter in 2020, which will subsequently increase by P2 per year until it reaches P43 per liter in 2024. Thereafter, the rate will increase by 6 percent every year.
-Heated tobacco products: P25 specific tax rate in 2020; P27.50 in 2021; P30 in 2022; and P32.50 in 2023, with a 5 percent indexation thereafter.
-Salt nicotine: P37 specific tax rate in 2020; P42 in 2021 per milliliter; P47 in 2022; P52 in 2023, with a 5 percent indexation thereafter.
-Conventional/Free Base nicotine: P45 specific tax rate in 2020 per 10 milliliters; P50 in 2021; P55 in 2022; P60 in 2023; with a 5 percent indexation thereafter.
Aside from imposing additional sin taxes, the measure also includes a provision exempting medicines for heart disease, diabetes, and high cholesterol from value-added tax (VAT) starting January 2020.
Medicines for mental health, cancer, tuberculosis, and kidney diseases will also be VAT-free starting January 2023.
The government has branded the measure as a “win-win situation” as it seeks to curb vices while supporting the nationwide health program and exempting specific prescription medicines from VAT.