On excise tax and investment challenges for the Philippines

Two recent reports on public finance leadership caught my attention.

- BIENVENIDO S. OPLAS, JR.

First was the exit of Bureau of Internal Revenue (BIR) Commissioner Romeo D. Lumagui, Jr., who was replaced by Department of Finance (DoF) Undersecretary Charlito Martin R. Mendoza. And the second was on the reported exit of Executive Secretary Lucas Bersamin who, it is said, will be replaced by DoF Secretary Ralph G. Recto, with Special Assistant to the President for Investment and Economic Affairs Frederick Go to become the new Finance Secretary.

See these reports: “Finance Usec. Mendoza takes over BIR” (Business World, Nov. 14) and “Bersamin on way out? Not true until it actually happens” (Philippine Star, Nov. 17).

NEW BIR CHIEF AND EXCISE TAX

The new BIR Commissioner, Charlie Mendoza, is no stranger to BIR work because the bureau was under him in his work as DoF undersecretary. Among the challenges for him in his new role is how to arrest the declining share of excise tax revenue to total revenues, from 15.2% in 2020 to 13.4% in 2022, 10.7% in 2024 and only 7.1% from January to July this year.

While excise tax collections from alcohol, sugar-sweetened beverages, mining, and automobiles keep rising consistently, excise tax revenues from tobacco have been declining since 2022. The share of the tobacco tax to total excise tax has been declining, from 55.6% in 2021 to 51% in 2022, 46% in 2023, and 44% in 2024.