The Effects of Sin Tax



A Healthy Society is one of the main goals that the government wants to achieve. But how will the government will achieve that goal if its citizens consume goods detrimental to health such as alcohol and cigarettes?

In 2012, during the Aquino Administration, Republic Act 10351 or the Sin Tax Reform Law has been passed to support the government’s goal. It is mainly a health measure but it comes out as a way of earning revenue of the government.

The Sin Tax Reform law concept is this: ‘if prices of sin products increase, most likely, the Filipinos will no longer buy the said products.’ Such increase in prizes is a result of the increased excise tax charged to sin goods, thereby resulting to additional revenue for the government. The general public usually accepts sin taxes because they are indirect taxes that only affect those users of the sin products.

StockSnap / Tax on Cigars and Liquor

The Sin Tax on Cigarettes and Alcoholic Drinks




Effective January 1, 2016, the sin tax law charges a tax of Php25.00 per pack of cigarette if the net retail price is Php11.50 and below excluding taxes and Php29. 00 per pack if the net retail price is above Php11.50 excluding taxes. Effective January 1, 2017, the taxes increased to Php30.00 per pack of cigarette packed by machine. While for fermented liquors including beer, lager beer, ale, porter and other fermented liquor (except for tuba, basi, tapuy), the charged sin tax is Php21.00 per liter if the net retail price per liter is Php50.60 and below excluding taxes, Php23.00 if the net retail price is more than Php50.60 excluding taxes effective January 1, 2016. Effective January 1, 2017 the tax on all fermented liquors shall be Php23.50 per liter.

The republic Act 10351 requires manufacturers and importers to submit to the commissioner a sworn statement of the volume of the sales for each particular brand sold for the three-month period immediately preceding within 30 days from the effective date of the Act and within the first five days of every month thereafter. Any manufacturer or importer who violates, misdeclares or misrepresents any pertinent data or information in his sworn statement shall be penalized by a summary cancellation or withdrawal of his permit to engage in business of manufacturing or importing.

Effect of Sin Tax

As a result of the implementation of this Act, the industry sales of sin products dropped down. As a proof, the sales of cigarettes reflects the said decrease, from 102 billion sticks in 2012 to 86 billion sticks in 2013 and to 83-84 billion sticks in 2015. But excise tax revenues of the government grew significantly from 32 billion in 2012 to 141 billion in 2016. The said revenue collected in excise tax will be allocated to Department of Health and Department of Agriculture’s budget for their projects. 

Thus, the government’s objective of discouraging the consumption of sin products to prioritize the health of the people while earning revenue was achieved. Sin Taxes are not mainly for government revenues as consumers perceived it but rather another way for the government to increase the well-being of its citizens.