THE Department of Finance (DoF) is hopeful that the 18th Congress would continue to approve additional “sin” taxes after the signing into law of Republic Act 11346 that imposes higher taxes on cigarettes and a new tax on electronic cigarettes (e-cigarettes) and other alternative devices for smoking.
In a statement on Sunday, the department quoted Secretary Carlos Dominguez 3rd as saying that RA 11356 — signed by President Rodrigo Duterte on July 25 — would enable the government to properly implement its Universal Health Care (UHC) program.
The new law will bankroll this program, which would require an initial budget of P257 billion in its first year of implementation.
Under RA 11356, the excise tax on cigarettes will rise from the current P35 per pack to P45 starting January 1 next year. This will be followed by a P5 increase every year until the rate reaches P60 in 2023. Starting 2024, the rate will be increased by 5 percent every year.
The new law also imposes a new tax on e-cigarettes, including heated tobacco and vapor (vaping) products.
A minimum P10 excise tax will be slapped for 0-10 ml of liquid solution or gel starting January 1. Every 10.01-20 ml is taxed P20; 20.01-30 ml, P30; 30.01-40 ml, P40; 40.01-50 ml, P50; and for more than 50 ml, P50 plus P10 for every additional 10 ml.
Starting January 1, 2021, the rate will be increased by 5 percent every year.
“The revenues we will collect from the higher or new taxes on regular tobacco products and their alternatives will help fill the funding gap in the UHC program,” Dominguez said.
He noted, however, that the cost of the UHC program would grow at an average of around P11 billion to P12 billion a year, amounting to a five-year total of around P1.44 trillion by 2024.
The Finance chief said the cumulative funding gap by 2024 would reach P426 billion if there were no substantial adjustments on the current tax rates of “sin” products.
With this, the DoF said “Dominguez expressed the hope that the new Congress will also pass a law within this year that will increase excise taxes on alcohol products to at least P40 per liter and further raise taxes on heated tobacco and vapor products to the same level as that of regular cigarettes.”
Dominguez earlier said the government was considering a P45 tax rate per ml for vapor products, but a discounted rate of P31.5 per ml will be implemented for the 0.7 ml pod.
For heated tobacco, the government will propose a P45-per-pack tax rate — the same as that imposed on regular cigarette packs.