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[Ask the Tax Whiz] Taxing Unhealthiness: Is it a Healthy Approach? 

The Philippine Tax Whiz discusses the two proposed measures seeking to tax junk food and increase the excise tax on sweetened beverages

Recently, I heard that there was a proposal on taxing junk food products and sweetened beverages. What does this proposal contain?

The Department of Finance is considering the imposition of a tax on junk food, specifically pre-packaged food lacking nutritional value, at a rate of P10.00 per 100 grams or P10.00 per 100 milliliters, whichever is applicable. This tax would be imposed on items like confectioneries, snacks, desserts, and frozen confectioneries that exceed the DOH’s thresholds for fat, salt and sugar content.

Meanwhile, the proposal would impose a tax of P12 per liter, regardless of the type of sweetener used. This tax would also eliminate exemptions in order to broaden the tax base.

I recall that there was already an excise tax like that under TRAIN Law. How is this proposal different?

Under TRAIN Law, there was no excise tax on junk food, but there was an excise tax on sweetened beverages. The current excise tax on sweetened beverages depends on what sweetener is used, which is P6.00 per liter for those that use caloric and non-caloric sweeteners and P12.00 per liter for those that use high fructose corn syrups. It also exempts sweetened beverages using purely coconut sap sugar and purely steviol glycosides.

Under the present DOF proposal, there would be a flat P12.00 per liter imposed regardless of whether you use caloric and non-caloric sweeteners, high fructose corn syrups, or purely coconut sap sugar.

I have been reading that this proposal would be anti-poor. Does the government really need to impose this tax?

The government needs to raise P5.268 trillion for the 2023 National Budget, so increasing government revenue is really necessary. But that doesn’t mean that this measure should be the government’s priority. As I have reiterated time and again, before imposing new taxes, the government should first address loopholes in the tax system, such as by addressing smuggling, tax evasion, lifting the bank secrecy, and other similar measures. And if the government really needs to impose taxes, then they should make sure that the taxes do not impose unnecessary burdens on consumers.

More questions can be raised through the TaxWhizPH Mobile App. Just use the AskTheTaxWhiz feature of the app and our consultants will respond accordingly.

Originally published via Rappler

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