28 May 2019
SENATORS firmed up an emerging consensus Monday to raise cigarette excise tax on top of stiffer penalties against illicit tobacco traders, formally endorsing the measure for plenary consideration and approval.
Senator Juan Edgardo Angara, panel chairman, confirmed that majority of the 15-member panel endorsed Committee Report 714 raising the excise tax by as much as P45 in 2020 to P60 per pack in 2023; and mandating a 5-percent yearly hike starting January 1, 2024.
The committee report endorsed early approval of Senate Bill 2233, co-authored by Angara and Senators Sherwin Gatchalian, Joseph Victor Ejercito and Emmanuel Pacquiao. This amends pertinent sections of the National Internal Revenue Code, earmarking the incremental tobacco excise tax for human resource development programs for health professionals and programs aimed at combating smuggling and other illicit trade.
As approved by the panel, the committee reported provides the following scheduled tobacco tax increases: P45 per pack increase effective Jan. 1, 2020 until Dec. 31, 2021, P50 in Jan. 2021, P55 per pack in Jan. 2022 and P60 per pack effective Jan. 1, 2023.
Under the TRAIN Law, or the Tax Reform for Acceleration and Inclusion embodied in Republic Act 10963 which took effect on Jan. 1, 2018, existing excise tax rates on cigarettes packed by hand and packed by machine are as follows: P37.50 per pack beginning Jan. 1, 2020; P40 starting Jan. 1, 2022; and a 4-percent increase every year thereafter.
The proposed law prohibits selling tobacco products at a price lower than the combined excise and value-added taxes imposed under the proposed measure, with penal provisions against violators of not less than 10 times the amount of the excise tax plus value-added taxes due but not less than P200,000 nor more than P500,000, and imprisonment four to six years.
Apart from imposing stiffer penalties on the shipment of tobacco products under false name or brand or imitation and smuggled cigarettes, as much as P1.5 million to P15 million in fines will be slapped on those who transport or remove any manufactured tobacco other than the proper name or brand known to the trade. This, besides imprisonment of six to 12 years.
As proposed, the present P1,000 fine slapped against any person who is found in possession of imported tax-exempt articles subject to excise tax will be increased to a minimum of P100,000 to a maximum of P200,000 if the appraised value does not exceed P250,000. If the appraised value for the same offense exceeds P250,000 but does not exceed P500,000, the fine will be P1 million to P2 million and imprisonment of two to four years.
The bill further imposes fines of P3 million to P4 million and imprisonment of four to six years if the appraised value of the tax-exempt articles is between P500,000 and P1 million.
The report also endorsed a proviso that if the appraised value is more than P1 million but not more than 5 million, the corresponding penalty will be a minimum fine of P10 million to a maximum of P20 million plus imprisonment of 10 to 12 years, the report said. In addition, any person found in possession of locally manufactured articles subject to excise tax but which has not been paid in accordance with law, shall be punished with a fine of P1 million and imprisonment of five to eight years.
Moreover, the bill seeks to impose a fine of at least P50 million and imprisonment of five to eight years as penalty against manufacturer, importer, owner or person in charge of any article subject to excise tax who removes or allows or causes the unlawful removal of such articles from the place of production or bonded warehouse.
It further provides that the mere unexplained possession of articles subject to excise tax, the tax on which has not been paid in accordance with law, shall be punishable with a fine of not less than 10 times the amount of the excise tax due on the articles found but not less than P1 million and imprisonment of five to eight years.
In addition, false, counterfeit and recycled tax stamps in excess of P50 million will be punishable by a fine of P500 million or up to five times the value of the illegal stamps seized and minimum of 10 years imprisonment.