Distilleries want level playing field on tax hikes

Distilleries argue that low income consumers will be unfairly penalized.

Local distilleries expressed their support to the proposed hike on alcohol products noting as it will help create a level playing field among industry players.

The DoF’s plan to exempt wines from the ad valorem tax is unfair to other alcohol makers

This was learned from the Distilled Spirits Association of the Philippines (DSAP) President Olivia Limpre-Aw as she expressed her sentiment that the proposed taxation for wine products seemed to be lighter, making it unfair to other alcoholic drinks such as distilled spirits.

“As we told the Department of Finance (DoF), if you want to increase our taxes, we’re okay with that as long as you level the field,” Limpe-Aw said during the recent Senate Ways and Means Committee meeting chaired by Sen. Pia Cayetano.

According to her, the DoF’s plan to exempt wines from the ad valorem tax is unfair to other alcohol makers.

The DSAP chief then stressed that under the DoF’s proposal, the government plans to collect two kinds of taxes from every proof liter of distilled spirits — first, a P40 specific tax and second, a 22 percent ad valorem tax based on net retail price per proof.

On the other hand, Limpe-Aw pointed out that for wines, the DoF proposes to impose a single specific tax of P40 per liter, exempted from ad valorem tax.

“We’re currently applying a progressive tax structure for distilled spirits. There’s no reason it can’t be done across categories in the alcohol sector/industry. We just need to look for the right balance,” Limpe-Aw explained.

She then noted that should the DoF proposal pushed through, low income consumers will be unfairly penalized as these individuals cannot afford to buy expensive wines costing up to P600,000 a bottle.

“Let’s compare: Ginebra San Miguel Gin will be sold at P94 a bottle under this proposed tax, so the tax is P32.66 or a tax burden of 34.74 percent. The most expensive wine — P600,000 — the tax is only P30 a bottle, or a tax burden of 0.005 percent,” she said.

Moreover, Limpe-Aw admitted that some distilled spirits cater to the affluent as some of these drinks sell for more than P20,000 per bottle.

Despite, the DSAP chief said that high-end distilled spirit brands still pay higher excise tax.

“Let’s use P20,000 per 750 ml bottle as our base price to compare taxes: the tax per bottle for this distilled spirit is P2,996.91. That’s still more than 100-times compared to the P30 tax on a P20,000/bottle wine,” Limpe-Aw explained.

Based on industry data, 91.3 percent of Filipino drinkers who consume distilled spirits mainly come from the “D” and “E” segments. But Limpe-Aw said that competition among industry players is tight in this price sensitive business.