Law Summary

SEC. 1: Specific Tax on Distilled Spirits

• Legal Principle: This section establishes the specific tax rates on distilled spirits based on their production source.
• Key Definitions:
  • Distilled Spirits: Includes ethyl alcohol and spirits produced from fermentation and distillation of various materials.
  • Proof Spirits: Liquor containing 50% alcohol by volume at a specific gravity of 793/10000 at 15°C.
  • Proof Liter: A liter of proof spirits.
• Tax Rates:
  • Spirits from specific sources (nipa, coconut, etc.): 60 centavos per proof liter.
  • Spirits from other sources: 7 pesos per proof liter.
  • Tax increases proportionally for spirits over proof strength.

SEC. 2: Specific Tax on Wines

• Legal Principle: This section outlines tax rates applicable to wines and imitation wines.
• Key Definitions:
  • Sparkling Wines: Taxed at 8 pesos per liter.
  • Still Wines: Varying rates based on alcohol content:
    • ≤14% alcohol: 75 centavos per liter.

    • 14% alcohol: 1 peso and 50 centavos per liter.

  • Imitation Wines: Over 25% alcohol taxed as distilled spirits.

SEC. 3: Specific Tax on Fermented Liquors

• Legal Principle: Establishes tax on various fermented liquors.
• Tax Rate:
  • Beer, lager, ale, and similar: 20 centavos per liter.
• Exceptions: Tuba, basi, tapuy, and similar domestic fermented liquors are excluded from this tax.

SEC. 4: Specific Tax on Cigars and Cigarettes

• Legal Principle: Sets tax rates for cigars and cigarettes based on wholesale price.
• Cigars:
  • Tax ranges from 2 pesos to 7 pesos per thousand based on price thresholds.
• Cigarettes:
  • Tax varies based on packaging and price:
    • ≤5 pesos per thousand: 6 pesos; increases with price.
    • Mechanically packed cigarettes incur an additional 100% tax.
• Requirements:
  • Manufacturers/importers must file sworn statements of maximum wholesale prices and costs.
  • Illegal to sell above stated prices without prior notice to the Collector of Internal Revenue.

SEC. 5: Specific Tax on Firecrackers

• Legal Principle: Establishes a flat tax rate on firecrackers.
• Tax Rate: 5 pesos per kilogram.

SEC. 6: Specific Tax on Playing Cards

• Legal Principle: Details tax rates for playing cards based on quantity and size.
• Tax Rates:
  • 3 pesos per pack of up to 60 cards.
  • Additional tax applied for packs exceeding 60 cards.
• Size Exception: Cards sized 2.5 cm x 6 cm or less are taxed at the same rate.

SEC. 7: Effectivity and Duration

• Legal Principle: Specifies when the Act takes effect and the duration of increased tax rates.
• Effectivity: The Act is effective upon approval.
• Duration: Increased tax rates are valid until December 31, 1952; after which, prior tax rates will resume.

Key Takeaways

• Republic Act No. 589 amends specific sections of the National Internal Revenue Code regarding taxes on distilled spirits, wines, fermented liquors, cigars, cigarettes, firecrackers, and playing cards.
• Clear definitions are provided for various categories of alcoholic beverages and tobacco products, each with specific tax rates.
• Requirements for manufacturers/importers include filing sworn statements and adhering to maximum wholesale prices.
• The Act introduces a temporary increase in tax rates, expiring on December 31, 1952, unless extended by Congress.