Duterte signs new sin tax reform law
Published Jan 23, 2020 12:00 am
By Genalyn Kabiling
President Duterte has signed the new sin tax reform law but vetoed a provision that prevents the government from conducting a raid on alcohol and tobacco facilities without a court order.
President Rodrigo Roa (ROBINSON NIÑAL JR. /PRESIDENTIAL PHOTO / FILE PHOTO / MANILA BULLETIN)
Republic Act No. 11467 seeks to increase the excise taxes on alcohol, heated tobacco, and vapor products mainly to generate funds for the government’s universal health care program.
An "item veto" was issued by the President after such provision supposedly curtails the search and seizure powers of the Bureau of Internal Revenue (BIR)
"I hereby register the item veto of Section 5 of the measure which was intended to further amend Section 152 of the NIRC (National Internal Revenue Code) as it effectively curtails the power of the State to collect taxes, and renders powerless the BIR to effectively implement enforcement mechanisms against illicit tobacco products," the President said in his line-veto message to Congress leaders.
Duterte said the phrase "upon order of the court" unnecessarily requires the BIR to secure a court order before it can enter any house building or place where the sin products are produced or kept.
Under the Constitution, the President may veto particular items in an appropriation, revenue or tariff bill, but the veto does not affect the item or items to which he does not object.
Under the new law, the government will impose a 22-percent ad valorem tax on top of the specific tax of P42 per proof liter for distilled spirits in 2020. It will be raised to P47, P52, P59, P66 per proof liter from 2021 to 2024. It will be increased by 6 percent every year effective 2025.
The excise tax on beer and fermented products will be P35 per liter for 2020, followed by a P2 increase every year until 2024. A 6-percent increase will be implemented in the succeeding years.
The government will also collect a specific tax of P50 per liter on all wines starting this year. It will have an annual increase of 6 percent every year.
For heated tobacco products, the new law also imposes an excise tax of P25 per pack in 2021, P27.50 in 2022, P30 in 2023, and P32.50 in 2024. The rate will increase by 5 percent every year thereafter.
Vapor products classified as nicotine salt will be slapped with an excise tax of P37 in 2021, P42 in 2022, P47 in 2023, and P52 in 2024. There will be an annual increase of 5 percent onwards.
The tax on freebase or classic nicotine vape will be increased to P45 in 2021, P50 in 2022, P55 in 2023, and P60 in 2024. The rates will be raised by 5 percent in the subsequent years.
The law included a provision directing the Food and Drug Administration (FDA) to determine and regulate the manufacture, importation, sale, packaging, advertising, and distribution of heated tobacco and other vapor products, including banning the sale to persons below 21 years old.
Those who violate the new law may face a fine ranging from P10 million to P500 million and imprisonment from five to eight years.
RA 11467 also included a provision exempting the sale or importation of medicines for diabetes, high cholesterol and hypertension from value-added tax (VAT) starting January 2020.
Also exempted from VAT payments are medicines for cancer, mental illness, tuberculosis and kidney diseases beginning January 2023.
Duterte, in his message, said the new law was a welcome development in the government's efforts to protect the public's health from the ill-effects of sin products as well as ensuring access and affordable healthcare services to Filipinos through additional revenues.
He ordered the FDA to formulate a regulatory framework on the manufacture, distribution, and use of heated tobacco and vapor products in the country.
"I commend the wisdom of Congress in acknowledging the unregulated manufacture, proliferation, distribution, and use of heated tobacco products and vapor products in the country, and accordingly establishing a framework for the regulation thereof by the Food and Drug Administration," he said.
"I am instructing the FDA to formulate the intended regulatory framework, and the relevant agencies to immediately operationalize the same upon issuance," he added.
Duterte said he was confident the multi-tiered effect of the sin tax law would be "a cost-effective health measure to reduce smoking and alcohol consumption among Filipinos” to support the Universal Health Care Act.
"Coupled with its positive impact in improving domestic resource mobilization, this measure will significantly reinforce and advance this administration’s commitment to provide a better quality of life for every Filipino,” he said.
The law was signed by the President on January 22, 2020.
President Rodrigo Roa (ROBINSON NIÑAL JR. /PRESIDENTIAL PHOTO / FILE PHOTO / MANILA BULLETIN)
Republic Act No. 11467 seeks to increase the excise taxes on alcohol, heated tobacco, and vapor products mainly to generate funds for the government’s universal health care program.
An "item veto" was issued by the President after such provision supposedly curtails the search and seizure powers of the Bureau of Internal Revenue (BIR)
"I hereby register the item veto of Section 5 of the measure which was intended to further amend Section 152 of the NIRC (National Internal Revenue Code) as it effectively curtails the power of the State to collect taxes, and renders powerless the BIR to effectively implement enforcement mechanisms against illicit tobacco products," the President said in his line-veto message to Congress leaders.
Duterte said the phrase "upon order of the court" unnecessarily requires the BIR to secure a court order before it can enter any house building or place where the sin products are produced or kept.
Under the Constitution, the President may veto particular items in an appropriation, revenue or tariff bill, but the veto does not affect the item or items to which he does not object.
Under the new law, the government will impose a 22-percent ad valorem tax on top of the specific tax of P42 per proof liter for distilled spirits in 2020. It will be raised to P47, P52, P59, P66 per proof liter from 2021 to 2024. It will be increased by 6 percent every year effective 2025.
The excise tax on beer and fermented products will be P35 per liter for 2020, followed by a P2 increase every year until 2024. A 6-percent increase will be implemented in the succeeding years.
The government will also collect a specific tax of P50 per liter on all wines starting this year. It will have an annual increase of 6 percent every year.
For heated tobacco products, the new law also imposes an excise tax of P25 per pack in 2021, P27.50 in 2022, P30 in 2023, and P32.50 in 2024. The rate will increase by 5 percent every year thereafter.
Vapor products classified as nicotine salt will be slapped with an excise tax of P37 in 2021, P42 in 2022, P47 in 2023, and P52 in 2024. There will be an annual increase of 5 percent onwards.
The tax on freebase or classic nicotine vape will be increased to P45 in 2021, P50 in 2022, P55 in 2023, and P60 in 2024. The rates will be raised by 5 percent in the subsequent years.
The law included a provision directing the Food and Drug Administration (FDA) to determine and regulate the manufacture, importation, sale, packaging, advertising, and distribution of heated tobacco and other vapor products, including banning the sale to persons below 21 years old.
Those who violate the new law may face a fine ranging from P10 million to P500 million and imprisonment from five to eight years.
RA 11467 also included a provision exempting the sale or importation of medicines for diabetes, high cholesterol and hypertension from value-added tax (VAT) starting January 2020.
Also exempted from VAT payments are medicines for cancer, mental illness, tuberculosis and kidney diseases beginning January 2023.
Duterte, in his message, said the new law was a welcome development in the government's efforts to protect the public's health from the ill-effects of sin products as well as ensuring access and affordable healthcare services to Filipinos through additional revenues.
He ordered the FDA to formulate a regulatory framework on the manufacture, distribution, and use of heated tobacco and vapor products in the country.
"I commend the wisdom of Congress in acknowledging the unregulated manufacture, proliferation, distribution, and use of heated tobacco products and vapor products in the country, and accordingly establishing a framework for the regulation thereof by the Food and Drug Administration," he said.
"I am instructing the FDA to formulate the intended regulatory framework, and the relevant agencies to immediately operationalize the same upon issuance," he added.
Duterte said he was confident the multi-tiered effect of the sin tax law would be "a cost-effective health measure to reduce smoking and alcohol consumption among Filipinos” to support the Universal Health Care Act.
"Coupled with its positive impact in improving domestic resource mobilization, this measure will significantly reinforce and advance this administration’s commitment to provide a better quality of life for every Filipino,” he said.
The law was signed by the President on January 22, 2020.