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The Bureau of Internal Revenue’s (BIR) tobacco excise tax revenues increased by 31% to PHP83 billion in the first seven months of 2021, compared to PHP63 billion in the same time the previous year.

According to a Department of Finance (DOF) analysis based on data from the Bureau of Internal Revenue (BIR), Philip Morris Fortune Tobacco Co. Inc. (PMFTC) remained the top cigarette manufacturer with excise tax payments of PHP42.04 billion from January 1 to July 31, up 6.9% from PHP39.3 billion in the same period last year.

Despite having the highest year-on-year (YOY) excise tax increase of 73.1 percent for the same period, DOF Assistant Secretary Ma. Teresa Habitan said in her report to Secretary Carlos Dominguez III that Japan Tobacco International (Philippines) Inc. (JTI) remained second in terms of market share with PHP38.8 billion in excise taxes paid.

From January to July of 2020, JTI paid PHP22.4 billion in excise taxes, an increase of PHP16.4 billion over the same time last year.

“Based on real volume as of July 2021, cigarette excise tax revenues totaled PHP82.97 billion, up 31% from PHP63.3 billion the previous year,” Habitan stated during a recent DOF executive committee (Execom) meeting.

Other cigarette makers, such as Associated Anglo American Tobacco Corp. (AAATC) and Kenstand Philippines Inc., paid the remaining PHP2.13 billion of the total PHP82.97 billion in excise duty receipts for the January-July 2021 period (KPI).

According to tax statistics, PMFTC’s market share of 50.7 percent remained greater than JTI’s 46.8 percent during the first seven months of 2021, according to Habitan.

“However, it should be emphasized that JTI’s stake grew by 11.4 percentage points from the previous year over this time. This was due to JTI’s volume increasing by 55.8% year over year while PMFTC’s reported volume decreased by 3.8 percent,” she said.

JTI’s volume of removals during the first seven months of 2020 and 2021, according to tax collections, was 498 million packs and 777 million packs, respectively.

“For the first seven months of the year, this is equal to a 278 million pack increase,” Habitan added.

She said that the PHP16.4 billion increase in taxes collected from JTI was due to an increase in the tax rate of PHP3.9 billion and an increase in the volume of PHP12.5 billion.

JTI’s tobacco products’ tax rate increased by 11.1 percent, or PHP5 per pack, while volume grew by 55.8%, or 278 million packs.

The volume of removals for PMFTC in the first seven months of 2020 and 2021 was 874 million and 841 million packs, respectively.

According to Habitan, this equates to a 33 million pack decrease in the first seven months of the year.

The rise in the tax rate accounted for PHP4.2 billion of the PHP2.7 billion increase in tax revenues from PMFTC, while the decrease in volume resulted in a revenue loss of PHP1.5 billion.

PMFTC’s tax rate rose by PHP5 per pack, but its volume fell by 3.8 percent, or 33 million packs, according to Habitan.

According to Habitan, the total combined volume of JTI and PMFTC as of July 2021 increased by 245 million packs, or 17.9%, as compared to the same time the previous year, with JTI accounting for all of the increase.

Excise taxes on cigarettes and other tobacco products were raised three times under the Duterte administration to generate more money for the government’s key programs, including the Universal Health Care (UHC) program.

The first occurrence occurred in 2018 as a result of the Tax Reform for Acceleration and Inclusion (TRAIN) legislation.

This was followed by Republic Act (RA) No. 11346, or the Tobacco Tax Law of 2019, which increased cigarette taxes to a uniform rate of PHP45 per pack beginning last year; and RA 11467, which imposed another wave of tax increases on e-cigarettes, as well as alcohol goods, beginning in 2020.

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