THE Action for Economic Reforms (AER) is urging the government to review the excise-tax structure on alcohol products, noting that alcoholic drinks enjoy preferential tax rates over their cigarette counterparts.
At the “Bawas Bisyo Youth Convention on Alcohol Harm Reduction” conference on Saturday at the Bayview Park Hotel in Manila, Jo-Ann L. Diosana, senior economist at AER, said the tax on alcoholic beverages is very low compared to that of cigarettes.
She noted, for instance, that beer is taxed at a low of only P19 per 300ml bottle.
“We see a lot of interventions for tobacco that can also work for alcohol. One effective measure can also be price, increasing the price of alcohol, and we can do it through taxes,” she said.
According to the economist, the thing about excise tax on alcohol is that the imposition is very low.
“There is still much room for us to increase the price [of alcohol products] through higher taxes. Right now, our policy on alcohol regulation is very relaxed,” Diosana said.
To lessen the consumption of sin products and help improve public health over the long haul while optimizing the tax-revenue intake under latest government strictures, the government should further increase the sin-tax impositions, the economist reiterated.
Likewise, she said, Republic Act 10351, or the so-called sin-tax law, could stand some amendments.
The law mandates an annual increase in excise tax of 4 percent that the AER considers too small to matter, given parallel efforts at boosting the budget for universal health care, for instance.
Intelligent legislation requires fiscal planners to identify the potential source for any new public-service measure well in advance to ensure the legislation gets the funding it needs to keep the letter and spirit of the legislation.
“We really have to have some data on it because the sin tax has been there for quite some time, but it hasn’t been increasing that high. The first significant increase was in 2013, and we still have to have more data so we can really determine at what price people will stop drinking alcohol,” she explained.
When RA 10351 was signed into law, excise revenues in 2013 totaled P103.4 billion, compared to only P55.7 billion in 2012.
Revenue from the excise tax on alcohol and tobacco products helped increase the budget allocated for health services in the country, which increased to P83.72 billion in 2014, from only P53.23 billion in 2013.
The AER came away from the conference, saying if sin-tax reforms were to be undertaken, the government must consider indexing taxes to inflation, update group retail prices to current ones, and move to a unitary tax system from a four-tiered sin tax table system at present.
An estimated 3.3 million people die each year due to the excessive intake of alcohol, with 5.1 percent of diseases attributed to alcohol consumption.
As of end-July of this year, approximately 514,664 Filipinos in Metro Manila are heavy alcohol drinkers, with ages ranging from 18 to 49, and 77 percent coming from the work force.
Alcohol tax falls under a population-based policy, because it affects the whole population and its target is to lower the prevalence of drinking. But then, alcohol tax also acts as a prohibition measure, especially if you’re price sensitive. Alcohol tax is a way to increase taxes and, therefore, reduce affordability,” Madeiline J. Aloria, researcher at the AER, also said.