Philippines "sin tax" proposal threatens duty-free liquor and tobacco

Gavin Lipsith

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A bill proposed in the country's senate suggests removing the excise tax exemption enjoyed by duty-free liquor and tobacco

New legislation proposed in the Philippines Senate this week could remove the excise tax exemption enjoyed by liquor and tobacco products in the country's duty-free stores. The move has been proposed as a final amendment to a ?sin-tax? bill that supporters hope will generate about Ps18bn ($320m) in tax revenues.

Commenting on the proposal, Senate president Franklin Drilon said that, although liquor and tobacco in duty-free shops would remain exempt from customs duties, it would be subject to other taxes. ?When you say duty-free, we understand it to be free of customs duty,? said Drilon. ?But if you look at the law, it is free of customs duties, of taxes and of value-added tax. We [aim to] remove the exemption from taxes so that now [duty-free shops] have to pay the excise tax, the same tax that is being paid by the local manufacturers.?

Local reports suggest that proponents aim to pass the bill before the Christmas adjournment, scheduled for December 17. However, analysts suggest the talks may be protracted given widely varying revenue expectations.

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