TO erase the perceived discrimination between locally produced distilled spirits as against imported ones, the chairman of the House of Representatives’ ways and means committee pushed for the passage of a bill that will restructure excise tax on said products.

In House Bill 4787, Liberal Party Rep. Hermilando Mandanas of Batangas sought to amend Section 141 of the National Internal Revenue Code (NIRC) of 1997, as amended, that prescribes the excise-tax rates on distilled spirits based on the raw materials used per proof of liter.

Mandanas’s proposal seeks to remove the raw materials used in producing the distilled spirits as the basis of imposing the excise tax.

He said the bill will harmonize the excise-tax system currently imposed on wines, fermented liquors and cigarettes as these excisable products are classified using the net retail price excluding the excise tax and value-added tax (VAT).

“All distilled spirits, regardless of materials from which they were produced, shall now be subjected to the net retail price per bottle of 750-milliliter volume capacity excluding the excise tax and VAT,” said Mandanas. 

“Cognizant of our multilateral agreement, this proposal shall erase the perceived discrimination between locally produced distilled spirits as against imported ones.

This proposal would send a positive signal to the global community that our country is serious in ensuring that our tax laws are in compliance with international agreements,” he added.

 With the restructuring of the excise tax on distilled spirits, the legislator said the government will generate a sizeable amount of revenues necessary to finance the annual fiscal deficit the national government is facing.

“The requirements of the national government for higher tax collection consequent upon good governance to finance social and infrastructure needs demand an increase in the amount and sphere of excise taxation of distilled spirits.

The potential incremental revenue will have an economic impact and will hopefully trickle down to the greater majority of our citizenry, who will benefit with the improved government services under the present administration,” he said.

Section 1 of the bill provides that all distilled spirits, regardless of materials produced, shall be levied, assessed and collected excise taxes in accordance with the net retail price per bottle of 750-ml. volume capacity, excluding the excise tax and the VAT.

As embodied in the measure, P29.36 will be collected per proof liter of distilled spirits that cost P70 and below; P44.04 per proof liter for those that cost more than P70 up to P120; P58.72 per proof liter of those that cost more than P120 up to P180; P158.73 per proof liter of those that cost more than P180 up to P250; P317.44 per proof liter of those that cost more than P250 up to P675; and P634.90 per proof liter of those that cost more than P675. 

The bill said medicinal preparations, flavoring extracts and all other preparations, except toilet preparations of which, excluding water, distilled spirits form the chief ingredient, shall be subject to the same tax as such the chief ingredient.

Distilled spirits as defined in the NIRC of 1997, as amended, is the substance known as ethyl alcohol, ethanol or spirits of wine, including all dilutions, purifications and mixtures thereof, from whatever source, by whatever process produced, and shall include whisky, brandy, rum, gin and vodka and other similar products or mixtures.