Lawmakers have rejected the proposal of the Department of Finance (DOF) to increase the excise taxes on petroleum products, saying the government should, instead, tax sugar-sweetened beverages (SSBs) to increase revenues.
House Deputy Speaker Romero S. Quimbo said it would be better for the government to impose a P10 tax on SSBs, as increasing the fuel excise tax would burden the poor.
“[The DOF and Congress] should consider taxing sugar-sweetened beverages than imposing an excise tax on petroleum products,” Quimbo said.
House Bill (HB) 292, filed by Partido Demokratiko Pilipino-Laban Reps. Horacio P. Suansing Jr. of Sultan Kudarat and Estrellita B. Suansing of Nueva Ecija seeks to impose a P10 excise tax on SSBs per liter of volume capacity to increase government revenues and “promote public health and wellness.” “There shall be levied, assessed and collected on sugar-sweetened beverages per liter of volume capacity, an excise tax of P10. The rate of tax imposed under this section shall be increased by 4 percent every year thereafter effective on January 1, 2017,” HB 292 read.
The bill defines sugar sweetened beverage as “a nonalcoholic beverage that contains caloric sweeteners/added sugar or artificial/non-caloric sweetener. It may be in liquid or solid mixture, syrup or concentrates that are added to water or other liquids to make a drink.”
“Sugar-sweetened beverages” include soft drinks, soda, fruit- drinks, sports drinks, energy drinks, sweetened tea and coffee drinks, and all nonalcoholic beverages that are ready-to-drink and in powder form with added natural or artificial sugar.
Excluded from the coverage of the measure are 100-percent natural fruit juices, 100-percent natural vegetable juices, yogurt and fruit-flavored yogurt beverages with pure fruit and vegetable juice or concentrate, meal replacement beverages (medical food), and all milk products—infant formula and milk alternatives.
The authors of the bill said sugary drinks and junk food are among the main culprits behind the rise in cases of obesity, diabetes, heart disease, high blood pressure, stroke and gallstones in the country.
While he was “elated” by the agreement of the DOF to his proposal to lower income taxes for individuals, Quimbo said measures to offset revenue losses from this is “unacceptable”.
“The last thing we want is to transfer the tax burden from the middle class—the sector that will benefit from income-tax reduction, to the poor—the ones who will shoulder bulk of the excise tax on fuel. That’s inequitable and not progressive,” he said.
In the meeting of the House Committee on Ways and Means last week, the DOF presented its tax-reform package, which restructures the tax rates and exempts individuals earning a gross income of P250,000 and below.
However, the DOF’s proposal also calls for increasing excise taxes on petroleum products as a “compensatory” measure. The DOF is pushing for a staggered increase of P6.00 per liter of diesel, kerosene and LPG to be imposed within a three-year period.
“While I totally agree with the government’s need to shore up its tax collection, we do not need to impose new taxes. We simply have to do better collection by plugging the leaks at the bureaus of Customs [BOC] and Internal Revenue [BIR],” Quimbo said.
“In the BOC alone, we lose P200 billion a year to smuggling. Oil alone accounts for a substantial portion of smuggled commodities,” he added.
For his part, Party-list Rep. Carlos Isagani Zarate of Bayan Muna, one of the authors of the measure seeking to lower personal income tax, scored the DOF for trying to “hostage” it by tying it up with proposals to increase other taxes.
“This is really unfair for Filipinos considering that we are overtaxed and underserved with 30-percent personal income tax, which is one of the highest in Asia, while health, education, transport and housing services are terribly wanting,”
Zarate said.
Instead of pushing for higher excise taxes, Zarate said the DOF should concentrate more on increasing their collection efficiency. He claimed that the BIR and the BOC fails to collect P500 billion to P600 billion annually.