Tax on junk food, higher soft drink levy pushed
The Marcos administration is reviving a plan to tax junk food and increase the imposts on sweetened drinks to address health issues especially among Filipino children and at the same time generate revenues for the cash-strapped government.
Finance Secretary Benjamin Diokno said in a statement on Wednesday night that his department and the Department of Health (DOH) were jointly pushing such taxes “as a proactive measure to [address] diabetes, obesity and noncommunicable diseases related to poor diet.”
They assume that consumption of salty foods would decrease by 21 percent yearly, if there were such a tax.
Diokno said that, under the proposal, a tax of P10 per 100 grams or P10 per 100 milliliters would be imposed on prepackaged food products that lack nutritional value.
The finance chief said the levy would cover products that exceed the DOH’s specified thresholds for fat, salt and sugar content—including confectioneries, snacks, desserts and frozen confectioneries.
The Department of Finance (DOF) also wants to increase the sweetened beverage tax rate under the TRAIN (Tax Reform for Acceleration and Inclusion) law to P12 per liter, or double the current level, regardless of the type of sweetener used in the products, according to Diokno.
He added that the tax rate would be adjusted annually for inflation “and exemptions will be eliminated to broaden the tax base.”
P76B a year
“These measures aim to strengthen the effectiveness of the sweetened beverage tax by further discouraging the consumption of such beverages,” he pointed out.
The national government is earning about P40 billion a year since the excise tax on sweetened drinks took effect in 2018 under the TRAIN law.
Data from the DOF showed that collections from the tax on sweetened drinks totaled P213.6 billion from 2018 to 2022.
Diokno said the additional revenues from the planned new tax package could reach P76 billion a year and fund important socioeconomic initiatives, such as the Department of Social Welfare and Development’s food stamp program.
“This [proposed new tax on salty foods and sweetened drinks] will provide support to one million food-poor households, to alleviate food insecurity and malnutrition,” he said.
In backing the proposal, the DOH on Thursday said the two tax measures would help bankroll various health programs and services, including the Universal Health Care Act.
In a statement, it said that it “recognizes the potential benefits of imposing a health tax or excise tax on unhealthy food and beverages to reduce the burden of malnutrition and noncommunicable diseases.”
The DOH said it was able to receive funding this year “five times higher than what it was 10 years ago” because of the taxes imposed on sweetened beverages under the TRAIN law.
Through the proposed new taxes, the DOH said it also hoped to “increase subsidies for the production of healthy food options” that are accessible and affordable to Filipinos.
The DOH first floated the idea of taxing salty foods in 2019, when the country’s consumption of 11 grams of salt a day was found to be more than double the 5 grams recommended by the World Health Organization.
That same year, the state-run National Tax Research Center (NTRC) released a study, titled “Feasibility of Imposing a Junk Food Tax in the Philippines,” showing that imposing excise taxes on salty snacks and fast-food items could generate as much as P73 billion in new revenues for the government annually.
Among the food and beverages considered by the NTRC as junk food were those sold by fast-food restaurants such as burger, fries, fried chicken, hotdog, pasta and pizza, among others; deep-fried and salty snacks; sugary desserts and sweets, and carbonated beverages or “soft drinks.”
Citing the results of the Food and Nutrition Research Institute’s (FNRI) Eighth National Nutrition Survey, the NTRC said three out of every 10 Filipinos age 20 and older were overweight or obese partly due to eating junk food excessively aside from a lack of physical activity.
Among children 5 years old and below, the number of obese rose to 5 percent in 2013 from 2.4 percent in 2003, the NTRC added, citing the FNRI survey.
Obesity among children age 6 to 10 also increased to 9.1 percent from 5.8 percent between the same 10-year period, while incidence among adolescents climbed to 8.3 percent last 2013 from 4.9 percent 10 years earlier.
“An overweight or obese individual has a higher risk of being afflicted with diseases like coronary heart disease, stroke, high blood pressure, diabetes, cancer, osteoarthritis and other serious chronic illnesses. In addition, habitual eating of junk food can trigger digestive problems, fatigue, depression and may also affect the brain function,” the NTRC warned, citing earlier medical studies.
The NTRC’s computations showed that domestic corporations engaged in junk food manufacturing and fast food chains had gross revenues averaging P541.6 billion from 2013 to 2017, with an average annual sales increase of 8.5 percent.
“To discourage the bad habit of eating or consuming foods detrimental to the body, especially for the young and the poor, an excise tax at the rate of 10-20 percent may be considered,” the study suggested.
Impact on the poor
However, the NTRC admitted that classifying products as “junk food” could pose difficulties as some cheap and accessible products were considered staples by many low-income families.
In fact, it said that “several legislators [recommended that] the proposal of taxing salty foods, such as dried fish and instant noodles, should be studied carefully since the former is the main livelihood of certain provinces while the latter is the typical go-to meal of many blue-collar workers.”
The NTRC suggested that the government consider subsidizing healthy foods to help address the impact of the new taxes on the poor.
“Restricting food advertising and possibly eliminating advertising of junk food, candies, soft drinks, fast food and sugared cereal for children, as well as providing more bicycle paths and recreational centers to encourage physical activity, can be considered,” the NTRC added.
The Philippine Chamber of Commerce and Industry (PCCI), the country’s biggest private business group, said it has yet to study the impact that new taxes on sweet and salty food would have on local businesses.
PCCI president George Barcelon said they have yet to decide on a firm stance concerning this planned measure.
Barcelon admitted that they were aware of the health risks associated with these food items and how frequent intake of these had become common for many during the pandemic, contributing to the progression of the coronavirus disease. —WITH A REPORT FROM ALDEN M. MONZON