June 11, 2015
Danessa Rivera (The Philippine Star)| http://goo.gl/4qOMbt
MANILA, Philippines - The International Monetary Fund (IMF) is backing the proposal to impose additional tax on sweetened beverages and raising excise tax on fuel which could result in higher government revenues to support the Philippines’ bid for inclusive growth.
IMF resident representative Shanaka Jayanath Peiris said tax measures were among the main topics discussed by the Asia Pacific Economic Cooperation (APEC) economies during the two-day Workshop on Fiscal Management through Transparency and Reforms in Bagac, Bataan.
Imposing tax on sweetened beverages such as softdrinks and increasing the excise tax on fuel could be part of a good comprehensive tax reform for the Philippines, he noted.
“If these measures are used to make the system more progressive by tackling key taxation, that could be a good inclusive growth package,” the IMF official said.
The proposed measures will generate more revenues for the government, which can be used for social development, Peiris said.
Filed in December 2013 by Nueva Ecija Rep. Estrellita Suansing and now pending for approval and signature into law, House Bill 3365 aims to slap a 10 percent ad valorem tax on carbonated beverages sold in bottles and other tight containers.
The bill also aims to use the revenues from the softdrink tax on the “rehabilitation fund that will finance housing, road construction and other infrastructure projects for areas affected by natural calamities.
Meanwhile, the imposition of higher tax on oil products is backed by the National Economic and Development Authority and the World Bank. The proceeds from this measure will allow government to spend more on critical infrastructure, according to the multilateral lender.
In another briefing, Organisation for Economic Cooperation and Development (OECD) Center for Tax Policy and Administration head of global relations Richard Parry said the Philippines has shown very significant size of direct engagement in the fiscal area.
“Fiscal area is important... It is tax and fiscal system, both in terms of collection of tax and proper expenditure of tax, where all social reforms like health system, education, depend on,” he said.
“The Philippines has done a lot to achieve policies which work in favor of social development by having sound fiscal strategy,” he added.
Among the tax measures heralded during the APEC workshop is the country’s sin tax law.
“The projections for sin tax revenues have exceeded the projections of the program, so in that sense, it’s been a great revenue enhancer and a very important measure [for social development],” Peiris said.
Signed into law in December 2012, the Sin Tax Law imposes excise tax on tobacco and alcohol products. The law mandates 15 percent of the incremental revenues for programs benefiting tobacco farmers while 80 percent will be used to enroll the second poorest 20 percent of the population to the state-run Philippine Health Insurance Corp. or PhilHealth.
As of end-2014, excise tax collections reached P112.81 billion with incremental revenue under the sin tax reform amounting to P50.18 billion. It has exceeded the P105.17 billion target for the year.