By Chino S. Leyco
The Department of Finance (DOF) wants its so-called tax reform package two-plus (TRAIN 2) covering the sin products and other areas of the mining sector to be passed into law next year.
Data from the DOF showed the government expects P62.66 billion from the comprehensive tax reform program (CTRP) package two-plus, bulk of which will come from higher levies slapped on alcohol and tobacco products.
Aside from sin tax, Finance Assistant Secretary Ma. Teresa S. Habitan said that CTRP package two-plus will also raise the tax on mining operations located in areas outside of the government-declared mineral reservations.
“Currently the royalty only applies to those mining areas which are declared mineral reservations, so the proposal is to include all even those outside of the mineral declared reservations,” Habitan said in an interview.
Based on the DOF data, the Bureau of Internal Revenue (BIR) could generate up P61.71 billion from package two-plus, while the Bureau of Customs is expected to collect P949 million.
For the BIR, the tax agency may raise P29.58 billion from higher excise tax on alcoholic beverages, another P24.3 billion from cigarettes, and P1.36 billion from non-mineral reservation royalty.
The Customs bureau, on the other hand, is estimated to gain P847 billion from higher excise tax on imported alcoholic products.
The DOF, meanwhile, removed from package two-plus its earlier proposal to impose taxes on gambling.
Habitan explained the casino tax will be included in succeeding CTRP package as it requires further study.
Once the excise tax is raised, the BIR and the Customs will also benefit from it through higher collection of value-added tax (VAT).
The DOF expects the BIR and Customs will generate additional P6.46 billion and P102 billion in VAT collection, respectively.
“Package two-plus will increase excise taxes for both alcohol and tobacco, which has corresponding effect on VAT because of the increase in the excise tax,” Habitan said.
The DOF wants to implement the CTRP package two-plus beginning 2020.
Under the Tax Reform of Acceleration and Inclusion (TRAIN) Act, the government already raise the unitary excise tax rate on tobacco to P32.50 per pack effective January this year from P30 a pack last year.
The TRAIN law also mandated a further hike in the cigarette excise tax rates to P35 per pack from July 1, 2018 to December 31, 2019; P37.50 a pack from January 1, 2020 to December 31, 2021; and P40 from January 1, 2022 to December 31, 2023.
Also, the excise tax rates slapped on alcoholic drinks increase every year under the Sin Tax Reform Law of 2012.