The Bureau of Internal Revenue (BIR) said it may miss its target of collecting P362.2-billion excise tax this year due to the drop in demand for tobacco products.
“The habit of using tobacco has decreased in the last 10 years. Tobacco products account for more than 40% of our import tax,” said BIR Assistant Commissioner Jethro M. Sabariaga. BusinessWorld via Viber.
“You don’t see many people smoking cigarettes these days. Even looking, you can confirm the change in market demand,” said Mr. Sabariaga, noting that the collection growth of other paid articles will not be enough to offset the decrease in tobacco tax.
Excise taxes are levied on the production, sale or consumption of goods. This includes tobacco, alcohol, and non-essential goods.
Mr. Sabariaga noted that the public’s shift to vape products, an alternative to cigarettes, has also contributed to the bureau’s excise tax collection.
One vape product is equivalent to one pack of cigarettes in terms of taxes, but vape products often take longer to consume, he said.
“So, a smoker switching to vaping, who usually uses 10 to 15 packs of cigarettes a month, will probably buy one vape product a month, or worse, one every two months,” said Mr. Sabariaga.
In a briefing last month, BIR Commissioner Romeo D. Lumagui noted the challenges in excise tax collection this year due to the continued trade in illegal products, especially tobacco.
The BIR lost about P7.2 billion in revenue from seized cigarettes and vape products in the first half of 2024, he said earlier.
Congress also has yet to pass revenue-generating measures that will help increase excise tax collection, Mr. Sabariaga, citing proposed taxes on single-use plastics, junk food, and the mining tax regime.
The Ministry of Finance has taken the position of not supporting the new tax while reforming the tax administration.
The BIR collected P194.93 billion in tax revenue in the eight months to August, down 3.08% from last year.
This was also 37.73% below the P313.06 billion target for the first eight months.
Property taxes collected in the first eight months account for about 59% of the full-year goal.
As of the end of August, tobacco products generated P84.42 billion, accounting for 43.31% of total taxes.
This was followed by alcohol products at P74.32 billion, sugary drinks at P25.8 billion, mineral products at P6.08 billion, and automobiles at P4.05 billion.
The government also made P164.82 million in non-essential goods, P88.04 million in fuel products, and P12.54 million in cosmetic procedures.
In August, excise tax collections rose 4.88% year-on-year to P27.74 billion. This was well below the BIR’s target of P41.79-billion for the month.
During the month, the government collected excise duty of up to P12.92 billion for tobacco products, or 46.57% of the money collected in Ncwabakazi.
Alcoholic products made P10.58 billion, followed by sugary drinks with P3.15 billion.
Other excise taxes collected in August were made up of mineral products (P535.85 million), automobiles (P534.67 million), non-essential goods (P16.59 million), petroleum (P2.98 million), and cosmetic procedures (P1. 65 million ).
In the first eight months, the tax revenue collected by the BIR increased by 12.55% to P1.92 trillion, representing 62.82% of the P3.055-trillion target for the year. – Beatriz Marie D. Cruz
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