Number 2 P155B Projected from "Sin Taxes""The national government expects to earn P154.73 billion inadditional reverences from 2013 to 2016 if Congress approved anew 'sin tax' system this year," the Department of Finance(DOF) said.Data from the finance department showed that once Congressapproved a new excise tax system on "sin products" this year,the government could easily earn P31.35 in additional revenuenext year.Of the amount, the DOF expects P26.87 billion revenue fromcigarettes, another P3.03 billion from fermented liquor, and theremaining P1.45 billion from distilled spirits.By 2014, state revenues from sin products would increase toP39.02 billion. Of the amount, P34.72 billion will be contributedby tobacco companies, P2.52 billion from fermented liquor, andP1.78 billion from distilled spirits.Government income from excise tax is expected to further risecome 2015 as it is expected to generate an additional P42.68billion revenues.The DOF estimated that smokers will pay P46.27 billion inexcise tax, while revenue from fermented liquor will grow toP3.79 billion and P2.62 billion would come distilled spirits.Meanwhile, the DOF projected that state revenues from sinproduct to decline in 2016 to P41.51 billion.Of the amount, the government sees P35.38 billion in taxes fromcigarettes, P3.03 billion from distilled spirits, and P3.1 billionfrom fermented liquor.With the new excise tax system, the government expects itsefficiency in collecting taxes would likewise improve, puttingthe country in better position to its goal of attaining investmentgrade.Tax effort, use to gauge efficiency of tax collection, is computedas a percent of the country's gross domestic product.To manifest efficiency in tax collection, a government should beable to increase the amount of taxes it collects every timeincome levels grow.Data from the finance department showed that the country's taxeffort has been in a declining trend from 14.1 percent in 1998,adding on worries if the three international credit rating firms Data from the finance department showed that the country's taxeffort has been in a declining trend from 14.1 percent in 1998,adding on worries if the three international credit rating firmsand investors.In an effort to further improve the government tax efficiency, thefinance department is pushing for the restructured excise taxregime and rationalization of fiscal incentives.London-based Fitch Ratings earlier said that the Philippines' lowrevenue base is the country's key weakness in the sovereigncredit profile, suggesting the need for a structural reform ratherthan just administrative measures.Fitch cited the proposed reforms to the so-called "sin taxes"alcohol and tobacco products as a measure that would enhancethe government's revenue sources.Questions:1) Is the proposed sin tax progressive or regressive? Who willbe burdened most? Why?2) Will there be substitution between brands? Why?

Sin Taxes The applicability of sin taxes mainly incurred for the harmful product in the society as…

Answered: Questions: 1) Is the proposed sin tax…

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Publisher:Libby

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Number 2

P155B Projected from "Sin Taxes"
"The national government expects to earn P154.73 billion in
additional reverences from 2013 to 2016 if Congress approved a
new 'sin tax' system this year," the Department of Finance
(DOF) said.
Data from the finance department showed that once Congress
approved a new excise tax system on "sin products" this year,
the government could easily earn P31.35 in additional revenue
next year.
Of the amount, the DOF expects P26.87 billion revenue from
cigarettes, another P3.03 billion from fermented liquor, and the
remaining P1.45 billion from distilled spirits.
By 2014, state revenues from sin products would increase to
P39.02 billion. Of the amount, P34.72 billion will be contributed
by tobacco companies, P2.52 billion from fermented liquor, and
P1.78 billion from distilled spirits.
Government income from excise tax is expected to further rise
come 2015 as it is expected to generate an additional P42.68
billion revenues.
The DOF estimated that smokers will pay P46.27 billion in
excise tax, while revenue from fermented liquor will grow to
P3.79 billion and P2.62 billion would come distilled spirits.
Meanwhile, the DOF projected that state revenues from sin
product to decline in 2016 to P41.51 billion.
Of the amount, the government sees P35.38 billion in taxes from
cigarettes, P3.03 billion from distilled spirits, and P3.1 billion
from fermented liquor.
With the new excise tax system, the government expects its
efficiency in collecting taxes would likewise improve, putting
the country in better position to its goal of attaining investment
grade.
Tax effort, use to gauge efficiency of tax collection, is computed
as a percent of the country's gross domestic product.
To manifest efficiency in tax collection, a government should be
able to increase the amount of taxes it collects every time
income levels grow.
Data from the finance department showed that the country's tax
effort has been in a declining trend from 14.1 percent in 1998,
adding on worries if the three international credit rating firms

Transcribed Image Text:Data from the finance department showed that the country's tax effort has been in a declining trend from 14.1 percent in 1998, adding on worries if the three international credit rating firms and investors. In an effort to further improve the government tax efficiency, the finance department is pushing for the restructured excise tax regime and rationalization of fiscal incentives. London-based Fitch Ratings earlier said that the Philippines' low revenue base is the country's key weakness in the sovereign credit profile, suggesting the need for a structural reform rather than just administrative measures. Fitch cited the proposed reforms to the so-called "sin taxes" alcohol and tobacco products as a measure that would enhance the government's revenue sources. Questions: 1) Is the proposed sin tax progressive or regressive? Who will be burdened most? Why? 2) Will there be substitution between brands? Why?

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