Sin Tax Reform Act

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To read this article in Filipino, see Sin Tax Reform Act.

Republic Act 10351 or the Sin Tax Reform Act and also known as the Sin Tax Lw of 2012 is a law that increased excise taxes on liquor and tobacco products, amending Republic Act No. 8424, or the National Internal Revenue Code of 1997. It was signed into law by President Benigno Aquino III on 20 December 2012, and was implemented 1 January 2013. The law added up to P33.96 billion worth of taxes that the government will use for the Universal Health Care Program.

By the first year of implementation of the Sin Tax Law, the government earned around ₱103.4 bilyon in additional taxes. By 2015, this increased to ₱141.8 billion, P100 billion of which came from tobacco products.

Additional funds were also given to the Department of Health from the collections due to the Sin Tax Law. In 2013, the DOH received a ₱50.4 billion budget, twice the amount of its budget (₱24.6 billion) in 2010. This increased to ₱83.7 billion in 2014 and ₱122.6 in 2016.

Provisions of the Law

Cigarettes

Cigarettes Packed by Hand

An excise tax of ₱12 per pack was levied on cigarettes starting 2013, increasing by ₱3 pesos per year until it became ₱30 per pack by 2017. The rate of tax imposed also increased by four percent per year starting 2018.

Cigarettes Packed by Machine

An excise tax of ₱12 per pack will be levied on products with a net retail price of ₱11.50 and below, while an excise tax ₱25 per pack will be imposed on products with a net retail price of more than ₱11.50, effective 2013. The taxes increased to ₱17 and ₱27 per pack by 2014, ₱21 and ₱28 per pack by 2015, ₱25 and ₱29 per pack by 2016 and ₱30 per pack by 2017. The rate of tax imposed also increased by four percent per year starting 2018.

Distilled Spirits

Distilled spirits have an ad valorem tax of fifteen percent of the net retail price per proof and a specific tax of ₱20 per proof liter, effective 2013. By 2015, the ad valorem tax and specific tax increased to 20 percent and ₱20 pesos, respectively. By 2016, the specific tax rate of ₱20 shall be increased by four percent every year.

Wines

Sparkling wines and champagnes have a tax of ₱250 for those with a price of ₱500 or less per 750 ml bottle, and ₱700 for those with prices above ₱500 per 750 ml, effective 1 January 2013. A ₱30 tax is imposed on still wines and carbonated wines containing 14 percent of alcohol by volume or less, and ₱60 on those with more than 14 percent of alcohol bu not more than 25 percent of alcohol. The tax rates are increased by four percent per year starting 2014.

Fermented Liquor

The following excise taxes are imposed on beer, lager beer, ale, porter and other fermented liquors except tuba, basi, tapuy and similar fermented liquors in accordance with the following schedule:

Effective 1 January 2013:

  • If the net retail price per liter of volume capacity is ₱50.60 or less, the tax shall be ₱15 per liter.
  • If the net retail price per liter of volume capacity is more than ₱50.60, the tax shall be ₱20 per liter.

Effective 1 January 2014:

  • If the net retail price per liter of volume capacity is ₱50.60 or less, the tax shall be ₱17 per liter.
  • If the net retail price per liter of volume capacity is more than ₱50.60, the tax shall be ₱21 per liter.

Effective 1 January 2015:

  • If the net retail price per liter of volume capacity is ₱50.60 or less, the tax shall be ₱19 per liter.
  • If the net retail price per liter of volume capacity is more than ₱50.60, the tax shall be ₱22 per liter.

Effective 1 January 2016:

  • If the net retail price per liter of volume capacity is ₱50.60 or less, the tax shall be ₱21 per liter.
  • If the net retail price per liter of volume capacity is more than ₱50.60, the tax shall be ₱23 per liter.

By 1 January 2017, the tax on all fermented liquors increased to ₱23.50 per liter, increasing by four percent every year starting 2018.

References

Citation

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