Quantcast

What is a sin tax?


Sin tax is an excise tax imposed on goods such as cigarettes and liquor or activities like gambling that are considered harmful or immoral.

Excise taxes, as opposed to general taxes, are selective in coverage and discriminating in intent. They are applied only to certain products and activities.

Excise duties on tobacco and alcohol are potential revenue sources because of high sales volume and few producers, and these make collection simple.

History of sin tax in PH

Pre-1986 — A tiered specific tax system based on suggested retail price is put in place.

1986 — President Corazon Aquino’s administration reforms the tax system by changing the specific or unit-based tax to an ad valorem scheme, which is based on manufacturer’s price, for cigarettes.

An ad valorem tax (AVT) scheme allows for automatic increases in collections with increases in inflation. Despite this, excise tax collections are low because cigarette manufacturers kept factory prices low.

1987 — The 1987 Constitution, Section 28, Paragraph 1 provides that “The rule of taxation shall be uniform and equitable. The Congress shall evolve a progressive system of taxation.”

1993 — Congress imposes a floor tax on each category of cigarettes, modifying the AVT system. Collections improve despite the bias against foreign brands.

1997 — Republic Act No. 8424 or the Comprehensive Tax Reform Program is  passed with the compromise that the AVT will revert to specific, but cigarette taxes will not be based on inflation. Instead, the rates will be based on net retail price.

2004 — Congress passes Republic Act No. 9334, contributing to raising tax collections, but it is widely considered a watered-down law. It came into force in January 2005. The law mandates an increase in the excise tax rate on all brands of cigarettes and alcohol products every two years. It specifies varying rates of increases until 2011.

Alcohol products are taxed based on the raw materials used to make the product, the net retail price per bottle of the product, and proof (volume of alcohol in alcohol-water mixture) of the beverage.

Cigarettes are taxed based on the brand’s retail price. Effective January 2011, low-priced cigarettes are taxed P2.72 per pack; medium-priced, P7.56 per pack; high-priced, P12 per pack; and premium, P28.30 per pack.

Sources:

1. http://archives.newsbreak-knowledge.ph/2010/04/01/timeline-the-making-of-rp%E2%80%99s-sin-tax-law

2. http://newsinfo.inquirer.net/162795/in-the-know-sin-tax-law


Follow Us


Follow us on Facebook Follow on Twitter Follow on Twitter


Recent Stories:

Complete stories on our Digital Edition newsstand for tablets, netbooks and mobile phones; 14-issue free trial. About to step out? Get breaking alerts on your mobile.phone. Text ON INQ BREAKING to 4467, for Globe, Smart and Sun subscribers in the Philippines.

Short URL: http://opinion.inquirer.net/?p=39578

Tags: cigarettes , Liquor , Sin Tax , smoking , taxes



Copyright © 2014, .
To subscribe to the Philippine Daily Inquirer newspaper in the Philippines, call +63 2 896-6000 for Metro Manila and Metro Cebu or email your subscription request here.
Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:
c/o Philippine Daily Inquirer Chino Roces Avenue corner Yague and Mascardo Streets, Makati City, Metro Manila, Philippines Or fax nos. +63 2 8974793 to 94
Advertisement
Advertisement

News

  • 12 dead, 96 injured in Holy Week accidents–NDRRMC
  • Filipino devotees re-enact crucifixion of Christ
  • Rouhani talks peace, outreach at army parade
  • Rains, thunderstorms on Good Friday
  • Carbon monoxide leak suffocates 20 in Catbalogan City
  • Sports

  • Heat seek Three-peat but Spurs, Pacers top seeds
  • Can Spurs get back at Heat? Can they survive West?
  • Hopkins, 49, seeks win for the ageless
  • LeBron still No. 1 with NBA’s most popular jersey
  • Pacquiao back in PH, heads home to wife, kids
  • Lifestyle

  • Levine designs womenswear with help from fiancee
  • Gabriel Garcia Marquez, Nobel laureate, dies at 87
  • Ford Mustang turns 50 atop Empire State Building
  • Pro visual artists, lensmen to judge Pagcor’s photo contest
  • ‘Labahita a la bacalao’
  • Entertainment

  • ‘X-men’ filmmaker slams ‘fabricated’ sex attack claims
  • Singer Chris Brown’s bodyguard on trial in DC
  • Whoopi Goldberg debuts as marijuana columnist
  • ‘X-men’ director accused of sex assault on teen boy
  • Cannes film festival launches race for 2014 Palme d’Or
  • Business

  • Italy sells luxury state cars on eBay
  • Asian shares mostly up in quiet trade
  • Dollar up in Asia on US jobs data, Ukraine deal
  • Barbie doll has a problem
  • Oil prices mixed ahead of long Easter weekend
  • Technology

  • Nokia recalls 30,000 chargers for Lumia 2520 tablet
  • Facebook rolls out ‘nearby friends’ feature
  • Netizens seethe over Aquino’s ‘sacrifice’ message
  • Filipinos #PrayForSouthKorea
  • Taylor Swift tries video blogging, crashes into fan’s bridal shower
  • Opinion

  • Editorial cartoon, April 17, 2014
  • A humbler Church
  • Deepest darkness
  • ‘Agnihotra’ for Earth’s health
  • It’s the Holy Week, time to think of others
  • Global Nation

  • WHO warns vs spread of MERS-Cov, urges vigilance in taking precautions
  • Last call for nominations to ’14 Presidential Awards
  • San Francisco business coalition slams proposed tax on sugary drinks
  • A ‘time-travel’ production of ‘Les Miserable’ at Stanford
  • Filipina Maryknoll sister honored for years of service
  • Marketplace