Briefer on the Sin Tax Law

(R.A. No. 10351 An Act Restructuring the Excise Tax on Alcohol and Tobacco Products)

Removal of the price/brand classification freeze. The proper tax classification of alcohol and tobacco products will be determined every two (2) years. Gradual shift to a unitary taxation. This is to simplify the current multi-tiered structure, to prevent downshifting to lowerpriced brands, to discourage consumption of sin products, and for easy tax administration. Structure
2013 Tobacco (per pack) Less than P11.50 P11.50 and more Less than P50.60 P50.60 and more P12.00 25.00 15.00 20.00 P20.00 + 15% P17.00 27.00 17.00 21.00 P20.00 + 15% P21.00 28.00 19.00 22.00 P20.00 + 20% P25.00 29.00 21.00 23.00 P21.80 + 20% P30.00 30.00 23.50 23.50 P21.63 + 20% 2014 2015 2016 2017

Fermented Liquor (per liter)

Distilled Spirits (specific per proof liter + ad valorem per proof) NRP per proof

Annual indexation of excise tax rates. To prevent the excise taxes to be eroded by inflation, the excise tax rates will be increased by 4% every year effective 2016 for distilled spirits, and 2018 for cigarettes and beer. WTO compliant on distilled spirits. The sin tax reform conforms to the WTO ruling on distilled spirits. Generates more revenues for the government. On the first year of implementation, the government is expected to raise additional revenues worth P33.96 billion, of which, P23.4 billion is

from cigarettes, P6.06 billion from distilled spirits and P4.5 billion from fermented liquors. Additional funding for tobacco farmers livelihood support. Section 8 of the law provides that, 15% of the incremental revenue collected from the excise tax on tobacco products under R.A. 8240 shall be allocated and divided among the provinces producing burley and native tobacco . . . which shall be exclusively utilized for programs to promote economically viable alternatives for tobacco farmers and workers. Higher health care spending. Eighty percent (80%) of the remaining incremental revenues will be allocated for the universal health care under the National Health Insurance Program and twenty percent (20%) will be allocated nationwide for medical assistance and health enhancement facilities program. Reduction of tobacco and alcohol consumption leads to better health outcomes. The reform envisions a healthy Filipino society. Under this reform, the youth and the poor will be protected.
Signed into law on 20 December 2012 and became

effective on January 1, 2013. The Implementing Rules and Regulations (RR 17-2012) were issued on December 21, 2012.