Recto: No new tax on junk food, sweetened drinks

January 25, 2024
The Philippine Star |

MANILA, Philippines —  Finance Secretary Ralph Recto is not inclined to impose additional consumption-based taxes such as on junk food and sweetened beverages as these measures can be inflationary, while the debt level remains manageable and does not warrant extra burden on Filipinos.

In his first briefing as head of the Department of Finance (DOF) and the economic team yesterday, Recto said he would refine and tweak pending tax proposals initiated by his predecessor, now Monetary Board member Benjamin Diokno.

What is certain, however, is that Recto will not push for consumption-based taxes especially on junk food and salty food, as well as the higher levy on sweetened beverages.

“These proposals were already scrapped and I don’t intend to put them back. These are not being considered,” Recto said.

“As to imposing new taxes, frankly speaking, there are no plans of imposing additional new taxes. I think our first job is to collect what is on the table,” he added.

Diokno earlier said the government will pursue a junk food and sweetened beverage tax in a bid to generate revenues while addressing diseases related to poor diet.

Such a tax measure is seen adding some P76 billion to state coffers and reducing consumption of junk food by 21 percent.

However, the proposal was also called “anti-poor” amid the lack of affordable food options in the market.

“There was a plan last year when they were preparing the budget and the revenues to be collected this year. But there was no bill in the House [of Representatives]. And the executive did not prepare a bill anyway,” Recto said.

“My understanding is that they did not pursue this anymore. So when I got to the DOF, it’s not there anymore and I’m not considering it either,” he said.

The finance chief emphasized that the economy is just regaining momentum from the pandemic and external risks remain, causing high inflation rate, which Recto said is the most urgent concern for Filipinos.

Recto noted that in the immediate term, inflation has to be tamed decisively and kept at bay, thus, new taxes would have to be properly studied.

“When you impose taxes, that is also inflationary. So I don’t think that now is the time to impose very high taxes,” Recto said.

Recto presently plans to pursue some of the pending DOF tax proposals but noted that these will be refined and be presented to the Legislative-Executive Development Advisory Council before presenting to Congress next week.

For one, Recto maintained that the DOF will temper the proposal to impose a motor vehicle road user’s tax, a measure that has already hurdled the House of Representatives but is pending at the Senate.

The pending measure aims to come up with a structured taxation plan based on their type and gross vehicle weight.

Recto argued that motorists are now paying a lot of taxes such as excise and value added tax on oil, as well as on the vehicles themselves. “Today, 50 percent or thereabouts, of vehicles are unregistered. And if you impose higher taxes, maybe more vehicles will not register,” Recto said.

“So I think we have to temper some of these increases because like I said, they’re also inflationary. And it’s all about timing as well,” he added.