Restructured excise tax on distilled spirits pushed

Wednesday, 15 June 2011 01:57

A House leader has moved to restructure the excise tax on distilled spirits to erase the perceived discrimination between locally produced distilled spirits as against imported ones.

Rep. Hermilando Mandanas (2nd District, Batangas), chairman of the House Committee on Ways and Means, said his proposed tax scheme on distilled spirits under House Bill 4787 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. Section 141 of the National Internal Revenue Code of 1997, as amended, prescribes the excise tax rates on distilled spirits based on the raw materials used per proof of liter. Mandanas' proposal is to remove the raw materials used in producing the distilled spirits as the basis of imposing the excise tax.

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 tax.

"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," Mandanas said.

Mandanas said with the restructuring of the excise tax on distilled spirits, 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," Mandanas said.

Section 1 of HB 4787, which further amends Section 141 of the NIRC of 1997, as amended, 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.

Under the bill, P29.36 will be collected per proof liter of distilled spirits that cost P70 and below; P44.04 per proof liter of 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.

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 chief ingredient as provided in the bill.

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.