MANILA – The Bureau of Internal Revenue maintains its stance against using ad valorem system or according to the value as the basis on excise tax in the country.

BIR Commissioner Kim Henares said  it will be difficult for the government to implement the ad valorem tax because although there are suggested retail prices for all the products offered in the market, the prices of sin products have a very wide range depending on where these are sold.

She said  SRP is only ideal when you buy the product in supermarkets.

Under the ad valorem system, the tax is determined by a percentage of the retail price of a product.

“What will be our basis for the retail price when in reality the price of beer, for example, varies when you buy it from the supermarket, the neighborhood stores, the beer houses and the upscale bars?” Henares said.

The government is proposinga staggered increase in sin tax rates until it becomes unitary after some years. Revenues from the higher tax is pegged at about P60 billion on the first year of implementation alone.

The House of Representatives approved on third and final reading in a 210-21 vote and five abstentions the passage of House Bill No. 5727, authored by Cavite Rep. Joseph Emilio Abaya on June 7, 2012.

The House-approved sin tax amendment aims to increase the tax on low-priced tobacco brands by about 700 percent in a two-year period with the additional revenue on the first year of implementation placed at about P33 billion.

President Benigno Aquino III had earlier certified this measure as urgent.

Among the features of the sin tax amendment is ensuring a playing level field for manufacturers as this will reduce the current four-tiered system for tobacco products to two and the removal of the current freeze of cigarette prices based on the 1996 prices. Another feature is pegging price increase on inflation.

In 2011, sin tax revenues amounted to P25 billion while government expenses for alcohol and tobacco-related diseases amounted to P177 billion.

The Senate expects to conduct the last hearing for this bill next week before coming out with its own version.*PNA

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