THE House of Representatives on Monday approved on third and final reading measures increasing excise tax on alcohol and tobacco products and simplifying taxes on financial products.
With 187 affirmative votes, seven negative votes and one abstention, House Bill No. 8677 which proposed to increase excise tax on tobacco products anew to raise revenue as well as discourage consumption, was passed by the chamber.
The bill proposed to increase excise tax on tobacco products by P2.50 annually until it reaches P45 per pack in 2022, and by 4% annually thereafter. It was provided that excise tax on cigarettes will increase to P37.50 from P35 in July 2019; P40 in July 2022; P42.50 in July 2021; and P45 in July 2022.
The Tax Reform for Acceleration and Inclusion (TRAIN) law had increased the excise tax on cigarettes to P32.50 from P30 in January.
The measure is intended to “raise additional revenue to fund the Universal Health Care (UHC) program of the government,” as stated in the bill’s Committee Report. Its counterpart measures, Senate Bills 1599 and 1605, meanwhile, remain pending at the committee level.
Also on Monday, the chamber voted 189-7 to approve on third reading the measure increasing excise tax imposed on alcohol products.
The tax measures on alcohol and tobacco products form part of the Package 2 plus of the comprehensive tax reform program (CTRP).
House Bill No. 8618 proposed to increase excise tax on distilled spirits to 22% from 20% ad valorem tax on the net retail price (NRP) per proof and a specific tax rate of P30 per liter from P23.40 in 2019. The specific tax rate will then be increased by P5 every year, until it reaches P45 in 2022, to increase by 7% annually beginning 2023.
The measure will also levy on sparkling wines a 15% ad valorem tax per liter, which is not imposed in the present system; in addition to a P650 specific tax per liter in 2019, which shall increase by 7% year annually. Currently, sparkling wines are taxed according to price: P316 per liter on sparkling wines costing P500 or less per 750 ml bottle; and P885.7 per liter on bottles costing over P500.
Still wines and carbonated wines with more than 14% alcohol will be taxed at P80 per liter in 2019 with an annual 7% increase thereafter. Currently, taxes on still wines with more than 14% alcohol are as follows:
• P75.9 per liter in 2019 for still wines with 14% to 25% alcohol per liter.
• P23.4 per liter in 2019 for fortified wines or still wines with more than 25% alcohol per liter.
For fermented liquors, the excise tax will increase to P28 per liter from P25.40 in 2019. The specific tax rate will increase to P32 in 2020; P34 in 2021; and P36 in 2022, and will increase by 7% every year beginning 2023.
House Bill No. 8645, or the proposed Passive Income and Financial Intermediary Taxation Act, likewise passed on final reading with a vote of 190-7.
House Bill No. 8645, among others proposed to impose a unified 15% income tax rate on interest, dividend, and capital gains from the current zero to 30% range.
The measure also provides for the following:
• a 5% tax rate on gross receipts from the current 0-7%, removing distinctions according to the security type, nature and maturity;
• standardizes at 0.75% the documentary stamp tax (DST) rate from the current 0-1% on the sale of original issue shares of stock, bonds, debentures, certificates of stock or certificates of indebtedness issued in any foreign country;
• removes DST on sales, agreement to sell, memoranda of sales, delivery or transfer of shares or certificates of stock. — Charmaine A. Tadalan
Article source: https://www.bworldonline.com/house-passes-three-tax-measures-on-3rd-reading/