Tax & Revenue

Senate OKs Tobacco Tax Hike Bill with New Amendments

Date: 04 June 2019; Type: Legal News; Source: Philippine News Agency

MANILA, Jun 4 (PNA) - The Senate approved on third and final reading a bill seeking to increase the excise tax on tobacco products after reconsidering its passage to propose new amendments.

With 21 affirmative votes and no negative vote, the upper chamber approved Senate Bill 2233 seeking an increase in excise tax for every cigarette pack from PHP45 to PHP60 in the next four years.

During the session, Senate Majority Leader Juan Miguel Zubiri moved to reconsider the second and third reading approval of the bill and opened the period of amendments to introduce changes regarding the shares of local government units (LGUs) from the tobacco tax collection.

The amendment proposes that 15 percent of excise taxes on locally manufactured Virginia-type cigarettes, but not exceeding PHP17 billion, shall be allocated and divided among the Virginia tobacco-producing provinces.

Of this share, 30 percent will be divided among the beneficiary provinces, while the remaining 70 percent will be provided to municipalities.

After the amendments were introduced, the chamber approved the bill on second reading and on third reading right after.

Congress dispenses with the three-day rule for measures certified by President Rodrigo Duterte as urgent.

Zubiri, in an earlier interview, said several congressmen from the Northern bloc in the House of Representatives threatened to block the measure if these amendments regarding the shares received by tobacco-producing LGUs were not introduced.

He also noted that the House is expected to adopt the new version precisely to dispense with the convening of a bicameral conference committee.

The bill proposes the following scheduled increase: PHP45-per-pack increase effective Jan. 1, 2020 until Dec. 31, 2021; PHP50 in January 2021; PHP55 in January 2022; and PHP60 effective Jan. 1, 2023.

A 5-percent yearly hike shall also be imposed effective Jan. 1, 2024.

Half of the proceeds from the taxes will be used exclusively for the implementation of the Universal Health Care law and health programs to be determined by the Department of Health.

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