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Business World Online reported that the Bureau of Internal Revenue wanted an addendum to the Sin Tax Law by covering distilled spirits into the stamp tax policy, following from the stamp tax they had placed on cigarettes.

First and foremost, what does stamp tax mean?    

Stamp Tax, according to the Business Dictionary.com, is a kind of tax levied on legal transactions which includes transfer of products or documents; hence, it can be considered as a “tax on the transaction of documents”[1]. Based on the report, “official tax stamps on products signify that all tax obligations of the manufacturer have been paid”[2], and taxpayers may include any enterprise, company, unity, or individual who executes and receives specified economic documents on distilled spirits. 
The full motivation for this reform was not explicitly stated in the article, but it was said that they wanted to “monitor the supply and sale of distilled spirits except beer”. Some of the details were the following: 1) Stamp tax on cigarettes will happen in April 2014, while stamp taxes for distilled spirits will follow; 2) all alcohol products except beer will be under the new policy; and 3) the firm who will win the tax stamp project for cigarettes will also handle the stamps for distilled spirits. 

This new policy seems to be very interesting but perhaps, one important question here is that: Is this new law sound and fair enough for all the parties involved, which includes the government offices, the business producing alcoholic products, and the consumers themselves.

There was no mention yet of how much tax would be applied but let us see the major advantages and disadvantages of this new policy:

First advantage was that illegal trade of distilled spirits can be avoided. According to the news report of Philippine Stat on the same issue, “studies have shown that there were known illegal trading of tobacco products due to the absence of stamp taxes on cigarettes”[3] and this caused informal distribution networks and important transaction costs to be not monitored.

With the new stamp tax, the supply and demand of the alcoholic beverages can be recorded properly. Under-the-table transactions can be prevented thereby protecting the market and the trade of these products. These are all pluses to the Philippine economy knowing that the sale of alcoholic beverages is relatively inelastic.

However, with this new stamp tax, revenues of companies producing alcoholic beverages can come out to be constrained. Since transaction of documents will now be heavily monitored, they can be subjected to tight rules and procedures that would significantly decrease opportunities for sale and marketing. This stamp tax would obviously incur a lot of costs for the alcoholic beverage industry. Would it not result to a decline of profits from the companies’ increasing costs?

For the alcoholic beverage industry, this is one issue that should be addressed and that should be anticipated. The policy’s motivation is good but is this the whole motivation by the government? Of course, the opportunity of getting more funds from the industry is one advantageous point for them, and so, we have to assess if this new policy is reasonable enough and fair enough to the whole society.        Also, another detail that should be given notice is that, why is that beer isn’t included in the proposed policy? Is it because beer sales is slowly declining and the sale and market of distilled spirits is gaining momentum at this time? Would this not show how the government is just after the revenues that it will get from the said industry?

With this new stamp tax, will the alcoholic beverage industry improve or on the other hand, worsen? Unless the government clearly states it reasons and clears out the doubts of corruption issues and ill profit-motivated laws, the society, both the producers and the consumers of the affected products will not be satisfied. Hence, we can expect for a rebellion from these agents.

For the economy, will this new stamp tax act be beneficial or not? Little is still known about it. What is needed is to further investigate on the details on this law and supervise its progress until its full implementation so as to prepare everyone for both and worst and the best things that could come from it.

Sources: 
[1] "What is stamp tax? definition and meaning." BusinessDictionary.com - Online Business Dictionary. http://www. businessdictionary.com/definition/stamp-tax.html (accessed September 6, 2013).
[2] Business World. "BIR wants liquor tax stamps." Business World Online. www.bworldonline.com/ content.php?section=Economy&title=BIR-wants-liquor-tax-stamps&id=75840 (accessed September 6, 2013).
[3] dela Pena, Zinnia . "Paper-based stamps on distilled spirits eyed   | Business, News, The Philippine Star | philstar.com." philstar.com | Philippine News for the Filipino Global Community. http://www.philstar.com/business/2013/09/02/1160791/ paper-based-stamps-distilled-spirits-eyed (accessed September 6, 2013).

(Taken from Business World Online, September 1, 2013 Issue)

by: Emilio Antonio | Marcella Karaan | Julian Martinez | Ivy Zuniga




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