PHILIPPINES: Sugar tax seen as bargaining chip for fuel tax debate

Published: 08/11/2017, 3:17:57 PM

The Executive is open to using its proposed tax hike on sugar-sweetened beverages (SSB) as a bargaining chip just to get the Senate nod for the House-approved scheme to impose an additional PHP6 (US$0.11) excise tax on gasoline and diesel, a key plank of the tax reform package eyed for passage by yearend, according to the Philippines' Interaksyon.

The chairman of the Senate ways and means committee, Senator Juan Edgardo Angara revealed this Thursday as he discussed how Executive and Legislative officials recently sat down with a view to facilitate approval of the Duterte administration's Tax Reform for Acceleration and Inclusion (TRAIN) package. The President had pointedly asked the Senate to pass the House-approved package when he delivered his State of the Nation Address (SONA) on July 24.

Meanwhile, three former health secretaries - Esperanza Cabral, Enrique Ona and Jaime Galvez Tan - are pressuring the Executive and lawmakers to include tobacco and alcohol tax hikes in the TRAIN, saying they were dismayed that such measures were not contemplated, when the evidence linking smoking and liquor to top diseases continues to rise.
Angara presided Thursday at his committee's hearing on the TRAIN bill, and was interviewed at the sidelines.

He said Finance Secretary Dominguez "was indicating they might be willing to trade the SSB but in exchange for full passage of the higher excise tax on fuel products." Angara meant the PHP6 fuel tax hike that the House approved before the recess last May. The House formula is to implement the tax hike in increments: PHP3 for 2018, PHP2 in 2019 and PHP1 for the third year.

Some senators had said earlier they would rather tweak the formula to reverse it to 1-2-3. Their logic: it's best not to shock the market with a whopping hike right on the first year.

As for the possible tradeoff of the sugar tax with fuel tax, Angara recalled telling Dominguez they would have to revisit the options.

He indicated there was nothing firm yet on the potential compromise: "Not yet. we are still at the discussion point. It was just raised by the Finance what do you think?"
Why exclude sin tax hikes?

At a forum on Tuesday, Cabral, Ona and Galvez Tan united with physicians, health organizations and civil society organizations to support the inclusion of higher cigarette tax in the tax reform measure being pushed in the Senate to address two of the most pressing health problems in the country - tobacco use and malnutrition.