Philippines: DOF mulls ban on online sale of cigarettes, alcohol

6 July 2020

Mary Grace Padin: The Philippine Star,

MANILA, Philippines — In another step to tighten the regulation of sin products, the Department of Finance (DOF) may ban the online sale of cigarettes and alcoholic beverages.

In a text message to reporters, Finance Secretary Carlos Dominguez said the DOF may ban the sale of cigarettes and alcohol in online spaces where it is hard to ensure that they are not being sold to minors.

“We will move to ban online sales of cigarettes and liquor,” Dominguez said.

The proposal comes at a time when more Filipinos are using online transactions to buy products, especially with community quarantines in place to contain the  COVID-19 outbreak.

In one large online shopping platform, some sellers are selling bundles of cigarette packs at 40 to 50 percent off.

Given the high discounts, Dominguez said the government would get in touch with Lazada to verify if these cigarettes are fake or counterfeit.

The government recorded a decline in excise tax collections from alcohol and tobacco products from January to May due to movement restrictions on non-essential items.

From January to May,  sin tax collections from these products decreased by 39 percent to P63.1 billion from P102.71 billion in the same period last year.

For May alone, excise tax collections from alcohol and cigarettes dropped by 43 percent to P11.91 billion from P20.87 billion in 2019.

Aside from movement restrictions, Finance Undersecretary Gil Beltran said the imposition of liquor bans by various local government units and the overall decline in the demand for sin products amid the coronavirus pandemic also affected collections.

Citing data from the Bureau of Internal Revenue (BIR), Beltran said the volume of cigarette removals from factories from January to April  contracted by 72 percent to 376.3 million packs from 1.34 billion a year ago.

The volume of fermented liquors transported from factories likewise dropped by 49.6 percent year-on-year to 362.8 million liters, while removals of distilled spirits declined by 51.8 percent to 71.5 million liters.

In July last year, Duterte signed Republic Act 11346 which increased excise taxes on tobacco products and introduced a new tax on electronic cigarettes.

Duterte then signed RA 11467  in January, which yet again increased the taxes on alcoholic beverages and e-cigarette devices.

According to estimates from the DOF, the additional revenues from these tax measures are expected to reach P13.2 billion this year, and P73.1 billion from 2020 to 2022.