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 lower-
priced brands, to discourage consumption of sin products, and for
easy tax administration.
 
Structure


2013 2014 2015 2016 2017
Tobacco (per pack)
Less than P11.50 P12.00 P17.00 P21.00 P25.00 P30.00
P11.50 and more 25.00 27.00 28.00 29.00 30.00
Fermented Liquor (per liter)
Less than P50.60 15.00 17.00 19.00 21.00 23.50
P50.60 and more 20.00 21.00 22.00 23.00 23.50
Distilled Spirits (specific per proof liter + ad valorem per proof)
NRP per proof
P20.00 +
15%
P20.00 +
15%
P20.00 +
20%
P21.80 +
20%
P21.63 +
20%


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 farmer’s 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 J anuary 1, 2013. The Implementing Rules
and Regulations (RR 17-2012) were issued on December
21, 2012.