DOF Chief Announces No New Taxes for 2021

Despite an expected decrease in government revenues due to pandemic-induced economic fallout, the Department of Finance (DOF) is not looking into new taxes to fund the country’s budget for 2021.

DOF Secretary Carlos G. Dominguez III said that no additional tax measures are being contemplated as a potentially new source of revenue for the 2021 proposed P4.2 trillion national budget of the Duterte administration.

Likewise, the DOF is not considering additional levies on goods which are deemed harmful to the society such as cigarettes, at this time. These goods have been a reliable source of revenues of the government.

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Excise Tax

The government is not pushing for the faster implementation of the scheduled tax increases on cigarettes, as provided for under Republic Act 11346, or the Tobacco Tax Law of 2019.

Under the said law, there will be an incremental increase on excise tax on cigarettes which should start this 2020. It will increase by five percent each year beginning 2024.

At present, the sin tax on cigarettes is pegged at P45 per pack. It will become P50 per pack by next year, and will continue to increase by P5 each year until it becomes P60 by January 2023.

There is also a provision on the law that imposes taxes on e-cigarettes by at least P10 per millimeter for e-juices with high concentrations of nicotine, or nicotine salts.

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Excise tax on cigarettes were first raised through the Tax Reform for Acceleration and Inclusion Act, or the TRAIN Law, before the enactment of the Tobacco Tax Law of 2019.

The Finance Chief shared that this is the only administration that actually cleaned up the cigarette industry and raised tobacco excise taxes twice. He added that this has never happened in any past administration.

Projections for the government revenue is at P2.849 trillion, 24 percent lower than the previously estimated P3.849 trillion.

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