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Salceda says House tax panel to consider DOH proposal for higher taxes on ‘sin’ products; House tax chair dampens proposal for higher junk food taxes, but open to higher cigarette, alcohol, sugary drinks taxes

September 11th, 2022

House Ways and Means Chair Joey Sarte Salceda (Albay, 2nd district) says his committee will consider the proposals of the Department of Health to raise excise tax rates on so-called ‘sin’ products, including sweetened beverages, cigarettes, alcohol, and novel tobacco products, including “vape.”

On September 9, 2022, the Department of Health, in a televised briefing announced that it is pushing for higher taxes on sweetened beverages and ‘junk food’ or non-nutritious food. Salceda said that the House tax panel will seriously study all proposals of the Health Department.

“We will definitely consider the proposals for higher taxes on sweetened beverages. It might help reduce overall sugar demand and help us manage the supply deficit and reduce the need to import. It seems like there is space, especially since sugary drinks increased prices year-on-year by just 3.9% last August. According to official statistics, sugar prices increased 26% over the same period. So, obviously, there is very little pass-through, especially since sugary drinks use imported bottler’s grade sugar, the wholesale price of which is just P20/kg,” Salceda said.

Salceda emphasized however that “the committee will study the impact, especially since revenue collection has already flatlined to the 32-35 billion per year mark. We want to see whether it will really have an impact on obesity.”

“Definitely, my office will pursue more regulation, taxation aside. Definitely, we are going for a ban on sugary drinks in public and private grade schools,” Salceda said.

On junk food

Salceda, however, says that the committee is not inclined towards a ‘junk food’ tax.

“We are disinclined towards a junk food tax. It seems that global best practices that really work are closer to regulation than taxation, especially on salt levels. The Singapore model is industry and government working together to lower salt levels in food.”

“The better approach there might be to restrict sales in schools where children have greater access to them,” Salceda said.

“Besides, defining what junk food is will definitely be a challenge.”

“We will still study taxes on junk food, but we lean towards regulation rather than taxation.”

Cigarette, alcohol, and vape taxes

Salceda also said that the committee is still open to higher taxes on cigarettes, alcohol, and novel tobacco products such as “vape.”

“We will definitely consider the proposals. In fact, I am already preparing a bill on higher taxes on vape products, especially now that global jurisprudence already acknowledges the harm in vaping,” Salceda said, after a tentative agreement on a multi-state settlement with JUUL Labs, a vape product manufacturer, worth over $438.5 million.

“It is now acknowledged in courts abroad that vaping has harms. So, there is an impetus to further discourage consumption there.”

Salceda says that the committee will also study cigarette and alcohol taxation levels.

“I have already formed a study group with civil society and government agencies on the matter, to craft ideal rates and taxation design.”

“Again, we will consider all proposals, and all counter-arguments, including illicit trade, jobs losses, inflationary impact, as well as what works in other countries. In principle, the committee believes in health taxes, especially to fund universal health care.”

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