DOF tells Senate: Swap sugar tax for fuel tax

MANILA, Philippines - The Senate committee on ways and means is studying an offer from the Department of Finance (DOF) to scrap its plan to impose an excise tax on sugar-sweetened beverages in exchange for the approval, in full, of the proposed excise tax on fuel.

Sen. Sonny Angara, the chairman of the committee, said the offer was made by Finance Secretary Carlos Dominguez III during the recent meeting held between some senators and the economic managers of President Duterte.

The meeting, which was arranged by Senate President Aquilino Pimentel III, was meant to help resolve the issues surrounding the comprehensive tax reform package submitted by Malacañang so that it could be approved by Congress right away.

The Senate is currently wrapping up its committee hearings on the tax reform package, after which plenary debates would be held.

Malacañang is pushing for the imposition of a P6 excise tax per liter on petroleum products, which is expected to generate the bulk of new revenues the administration is counting on to finance its ambitious infrastructure program.

Angara said the proposal would still have to be studied because the Senate could end up wanting to bring down the rate Malacañang is asking for.

“Of course we’re still studying the implications,” Angara said.

Angara said there is always concern about the inflationary effects of the tax on fuel, which the DOF claimed would be minimal.

One of the options being considered by the committee is to temper the rate for the first year of implementation, which the House of Representatives pegged at P3 per liter in the version it approved.

Under the House bill, the rate would go up by another P2 per liter in the second year of implementation and then by P1 per liter on the third year.

“We proposed that instead of 3-2-1, they agree to something less because the burden would be too high on the first year of implementation. We are waiting for their reply,” Angara said.

On the excise tax on sugar-sweetened beverages, Angara said that the committee intends to amend the proposal of the DOF, which was pegged at P10 per volume liter.

Angara said the bill was worded in such a way as to cover not only soft drinks and other “unhealthy” beverages, but also some milk products.