Wine importers push back against proposed tax scheme in House bill

A BILL to increase the excise tax on alcohol products will effectively “kill” the wine industry, a Senate committee was told.

“The newest version of this bill from the House is actually different from what was presented last week. The newest version threatens to kill the entire wine industry as well as my company,” Calabria Co. Ltd. president and general manager Christopher Quimbo said during a hearing at the Senate ways and means committee.

The committee is debating Senate Bill No. 383, which adopted the proposal of the Department of Finance and the Department of Health, and House Bill No. 1026, which won final approval at the House of Representatives.

Mr. Quimbo said the House version proposes an additional 15% ad valorem tax on wines on top of the specific tax rate that will increase to P60 from P37.9 currently.

“Right now, our company pays P37.9 pesos per liter in tax, which the Senate version increases to P40 per liter,” he said.

“But recently we found out that on third reading, it increases it to 97.5 pesos per liter because it’s a combo tax.”

Premier Wine & Spirits President JP Santamaria and Pablo Garcia Morera of the Spanish Chamber of Commerce the Philippines also pushed back against the ad valorem tax.

“I am aligned with Chris Quimbo on the non-imposition of ad valorem tax on still wines and sparkling wines. Wine is the healthier alternative, and second we don’t actually grow grapes here, it shouldn’t be taxed” Mr. Santamaria said.

He noted the ad valorem tax was also not proposed by the DoF originally.

Mr. Garcia said at the hearing: “With the new proposal, to have an excise tax and ad valorem, on top of that, have the VaT (Value-added Tax), the import tax, it seems quite excessive to impose that.

Finance Undersecretary Karl Kendrick T. Chua said the DoF is “not too concerned” on adding an ad valorem tax on wine products, considering it is only 1% of the alcohol market.

“The House passed a slightly more complicated system, wherein there is a tax on the volume, the specific (tax), and there’s also another tax, the ad valorem, so officially, our position, given that wine is 1% of the total alcohol market, we were not too concerned in creating a very different system,” Mr. Chua said. — Charmaine A. Tadalan