June 22nd, 2023
House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) said that the House tax panel has not yet received a formal proposal for a tax on salty food from the Department of Finance or the Department of Health, and that the committee is “still studying the best form of a junk food tax, or whether to do it at all.”
“We have not received the proposal yet. But when we do, it will go through the usual tests the committee applies. Who pays for it? What are its macroeconomic impacts? What are the costs and benefits? What are other countries doing? And what do we do if something goes wrong?” Salceda said.
Salceda adds that the committee has also not received “a formal bill from the DOF on sweetened beverages.”
“The decision of course will depend on data. We are just in the median of obesity rates in the region, while having the highest sweetened beverage levies in ASEAN.”
“As for salt, we do exceed the 2g per day of sodium recommended by the World Health Organization. So, there is cause for government-led efforts to reduce consumption. But, we are also looking at research, and as for salt, it appears that the highest proportion of excess salt in diets come from added salt in food and sauces – so not necessarily ready-to-eat junk food.”
“In that sense, taxation might not be the best measure,” Salceda said.
“We will also look at inflationary impact – because there will definitely be price implications on taxes on food,” Salceda explained.
Salceda said that the House tax panel will also consider “whether we are in line with the Medium-Term Fiscal Framework of the Marcos administration.”
“If deficit and debt figures are projected to be significantly higher than expected, then we will need fiscal consolidation efforts. That may include new taxes.”
“Of course, we will also look at whether there are widely available and affordable alternatives. That’s why we are working with the Department of Social Welfare and Development to create a food stamp program that will make cheap healthy food available to underprivileged families.”
“So, these are the reasons that will drive the decision of the Ways and Means Committee when it comes to food taxes.”
Tax panel open to junk food taxes, but will prioritizes taxes that hit rich people more
Salceda also said that the committee will prioritize tax measures “that are clearly progressive and hit the rich first.”
Salceda explained that the House tax panel will discuss “motor vehicle user taxes, especially on heavier cars; and luxury goods taxes first” before it tackles taxes on food.
“Progressivity is definitely the first priority, because that is the only quality of tax measures that the Constitution specifically requires. So, taxes that hit the rich come before taxes that hit the family table.”
Salceda also emphasized that “the Senate would also be well within right to prioritize non-resident digital service provider VAT because the whole region has already done that. We’re catching up.”
“Digital service providers VAT will probably be bigger and more effective at raising revenues than new junk food taxes. And the progressivity and fairness considerations are clearer.”