Philippines: Excise tax collections from tobacco up 31%

MANILA, Philippines — Excise tax collections from tobacco products went up more than 31 percent to P83 billion in the seven months to July from P63 billion a year ago, the Department of Finance (DOF) said.

Philip Morris Fortune Tobacco Co. Inc. (PMFTC) remained the top tax payer among tobacco firms with over 50 percent of the amount, followed by Japan Tobacco International (JTI) Philippines.

Finance Assistant Secretary Maria Teresa Habitan said taxes collected from PMFTC went up by nearly seven percent to P42.04 billion, while excise taxes from JTI jumped by over 73 percent to P38.8 billion

“However, it should be noted that JTI’s share for this period increased by 11.4 percentage points when compared to last year. This was due to JTI’s increased volume of 55.8 percent year-on-year, while PMFTC’s reported volume declined by 3.8 percent,” Habitan said.

JTI’s volume of removals grew to 777 million packs from January to July from 498 million packs during the same period last year.

On the other hand, PMFTC’s volume of removals slid by 33 million packs to 841 million packs, but taxes collected from the firm expanded due to the mandatory rate hike.

Habitan said the remaining P2.13-billion tax take from tobacco products came from the Associated Anglo American Tobacco Corp and Kenstand Philippines Inc.

Under President Duterte, the government started increasing taxes on smoking items through the approval of the Tax Reform for Acceleration and Inclusion Law. Bulk of the revenues generated from tobacco taxes are directed toward funding the universal health care program.

In 2019 the President enacted the Tobacco Tax Law that slapped a uniform rate of P45 per pack on cigarettes. The tax increased to P50 this year, will go up to P55 in 2022 and P60 in 2023, and will rise by five percent every year after.

The government plans to raise P2.88 trillion in revenues this year and expects to sustain a fiscal deficit of P1.85 trillion, or 9.3 percent of the economy.

Regulators were told to improve tax collection, including from sin products like cigarettes, to cut the budget shortfall to pre-pandemic levels within the next three years.