DOF Expects Higher Sin Tax Collection In 2024

Despite facing the ongoing challenge of rampant illicit trade, the Bureau of Internal Revenue (BIR) has been tasked to increase its collection of sin taxes next year, data from the Department of Finance (DOF) showed.

Photo Insert: Under the DOF tax collection program for 2024, the BIR has set a goal to collect P185.32 billion in tobacco excise taxes, and aims to raise its alcohol excise collection by 12.4% to P123.55 billion in 2024.

The BIR, which accounts for two-thirds of the government's annual revenue, is projected to increase its collections from tobacco and alcohol excise taxes by 10.4 percent to P308.9 billion in 2024 from the P279.8 billion target this year.

Its double-digit growth in sin tax collection goal was set in spite of the National Tobacco Administration's report on Aug. 2 revealing foregone revenues of more than P30 billion from illicit cigarette trading.

Under the DOF tax collection program for 2024, the BIR has set a goal to collect P185.32 billion in tobacco excise taxes, a 9.1% increase compared to the P169.84 billion target for this year.

Furthermore, the bureau aims to raise its alcohol excise collection by 12.4% to P123.55 billion in 2024, surpassing the P109.94-billion goal this year.

Last May, BIR Commissioner Romeo D. Lumagui Jr. raised concerns regarding the persistent prevalence of illicit tobacco products in the country, which resulted in lower-than-expected excise tax collections.

In the first four months of the year, Lumagui reported a 20% shortfall in excise tax collection, indicating the severity of the issue. Lumagui, however, emphasized the BIR's unwavering commitment to combat illicit traders and address the illicit cigarette trade problem.

Earlier, the BIR’s Large Taxpayers Service (LTS) had also lowered its target for 2023 excise tax collection by 4.7% from the initial projection of P351.6 billion to P335.04 billion.

The LTS serves as a specialized service center of the BIR catering to the tax-related needs of the country's largest corporations, primarily multinationals, and publicly-listed firms, including tobacco companies.

It has been a major contributor to the overall revenue collection of the BIR, accounting for a significant 47.9% of the bureau's total collection for this year alone.

For 2023, the BIR’s special unit expects to collect P1.599 trillion in total, a slight decrease of 0.12% from the original goal of P1.601 trillion. The BIR said the adjustment is primarily attributed to lower revenues from excisable goods, mainly "sin" products.

Although the overall target for the LTS has been reduced, the new revenue program, if achieved, would represent an 18.5% rise compared to the actual collection of P1.349 trillion last year.

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