MANILA, Philippines — The government will maintain restrictions on liquor sale and cigarette production for the rest of the extended lockdown period, as keeping Filipinos away from these “sin” products would protect them from coronavirus infection, Finance Secretary Carlos Dominguez III said on Monday.
As such, the liquor ban imposed by the national and local governments will stay in areas under enhanced community quarantine, while cigarette production will remain suspended, save for a few lines in companies churning out for export.
Over the weekend, the Department of Finance (DOF) reported a slump in the year-to-date tax take from tobacco and alcohol, describing it as “consistent large excise tax collection drawers.”
From Jan. 1 to April 15, tobacco excise fell 42.5 percent year-on-year to P33.19 billion, while collections from alcoholic drinks declined 26 percent to P17.85 billion.
This drop happened despite the higher tax rates slapped on these products since Jan. 1 under Republic Act No. 11346, which increased the levy on cigarettes, and RA 11467, which jacked up taxes on alcohol, heated tobacco and vapes.
Foreign loans
As tax collections dropped, the government increasingly turned to foreign loans from multilateral lenders and bilateral government partners to ensure that it can respond to the health and socioeconomic fallout from COVID-19.
Asked if the government may consider easing ECQ restrictions on the “sin” products to shore up badly needed government revenue to be spent in fighting COVID-19, Dominguez replied: “No.”
“Sin taxes are imposed to discourage consumption of products that are detrimental to health. We do not wish to exacerbate the current health crisis,” he said.
Last week, the finance secretary said he did not want the liquor ban lifted, but the government might exempt cigarettes from quarantine restrictions as smuggling of so-called illicit sticks increased after unscrupulous traders took advantage of dwindling supply of tax-paid packs.
Dominguez’s change of heart with regard to cigarettes came after a meeting with Health Secretary Francisco Duque III, who advised that smoking could aggravate a respiratory ailment like COVID-19.
The Center for Alcohol Research and Development (CARD) Foundation Inc., whose members include Absolut Distillers Inc., Emperador Distillers Inc. and Ginebra San Miguel Inc., had earlier appealed for the lifting of the ban or relaxing it on certain hours.
“If this ban continues, the industry can no longer survive; a situation that can affect a large sector of the community … the alcohol beverage industry bears already the agony of declining market demand due to the imposition of high excise taxes on alcohol,” CARD said in an April 16 letter to Trade Secretary Ramon Lopez.
As for cigarettes, manufacturers said in a report last week that “as a result of the enhanced community quarantine, it is likely the supply chain of illicit traders had also been disrupted.”