EXCISE TAX ON TOBACCO:

A TRADE-OFF BETWEEN INCOME

AND HEALTH
 What is Excise Tax

An excise tax is an indirect tax on the sale of

a particular good or service such as fuel, tobacco
and alcohol.
Indirect means the tax is not directly paid by
an individual consumer instead, the Internal
Revenue Service (IRS) levies the tax on the
producer or merchant, who passes it onto the
consumer by including it in the product's price.
 Type of Excise Tax
Ad Valorem
An ad valorem tax is a tax based on the assessed
value of an item such as real estate or personal
property
Example: Property Tax

Specific
Specific tax is a tax whose rate is based on a
particular quantity of a product, rather than on its
value.
Example: Sin Tax on Tobacco and Alcohol
Background of Tobacco Industry
Tobacco was first discovered by the native
people of Mesoamerica and South America and
later introduced to Europe and the rest of the
world.

Tobacco was introduced in the Philippines in

the late 16th century during the era of Spanish
colonization when the Augustinians
brought cigar tobacco seeds to the colony for
cultivation.
Legislation to Increase the Excise Tax
on Tobacco
During Aquino Administration, Republic Act
10351 or the Sin Tax Reform Law of 2012 was
passed.

Sec.144 Tobacco Products

Excise tax of P1.75 effective on Jan. 1,
2013 on each kilogram and increase every
year by 4% effective on Jan. 1, 2014
 Sec. 145 Cigar and Cigarettes
A. Cigars
Jan. 1, 2013 – Ad valorem 20% plus Specific
tax of P5.00 per cigar
Jan. 1, 2014 – Additional 4% per year

B. Cigarettes Packed by Hand

Jan. 1, 2013 – P12.00 per pack
Jan. 1, 2014 – P15.00 per pack
Jan. 1, 2015 – P18.00 per pack
Jan. 1, 2016 – P21.00 per pack
Jan. 1, 2017 – P 30.00 per pack
Jan. 1, 2018 – Additional 4% per year
C. Cigarette Packed by Machine
Jan. 1, 2013 - < P11.50, P12.00 per pack
> P11.50, P25.00 per pack
Jan. 1, 2014 – P17.00 ; P27.00
Jan. 1, 2015 – P21.00 ; P28.00
Jan. 1, 2016 – P25.00 ; P29.00
Jan. 1, 2017 – P30.00 per pack
Jan. 1, 2018 – Additional 4% per year
Comparison of the Excise Tax Rates
with Other Asian Countries
 Health Threats of Tobacco

- Cancer – Cancer of the lungs, mouth, throat,

esophagus, and more.
- Frequent colds.
- Chronic bronchitis.
- Emphysema.
- Stroke.
- Heart disease.
 Other Benefits and Drawbacks of
Increased Tax Rate on Tobacco

- Increase the health budget

- Reducing tobacco, Improving health