Gov’t offers to drop tax on beverages

Economic managers have told senators they are willing to drop the proposed tax on sugar-sweetened beverages in exchange for passing in full the proposed higher excise tax on oil products.

Sen. Sonny Angara said on Thursday that  Finance Secretary Carlos Dominguez III offered the trade when some senators and House leaders met with President Duterte in Malacañang on Aug. 1.

“Secretary Dominguez was saying they were willing to trade the (tax on) sugar-sweetened beverages, but we pass in full the excise tax on fuel,” Angara told reporters.

Angara is chair of the committee on ways and means, which is looking into Malacañang’s proposed comprehensive tax reform package.

The tax reform package seeks to lower personal income tax rates, expand the value-added tax base, raise excise taxes on oil products and automobiles, impose an excise tax on sugar-sweetened beverages, and ease the rates of estate and donor’s taxes.

Angara said he was unable to clarify with Dominguez whether the finance secretary meant the P6 per liter additional tax on oil products or the House of Representatives’ version of “3-2-1.”

Tweaking tax package

He said Dominguez proposed the trade as a “discussion point” as the Senate scrutinized the comprehensive tax package, which many senators fear would have inflationary effects and affect many industries.

The Aug. 1 meeting was where senators found Mr. Duterte open to tweaking the comprehensive tax reform package, a departure from his call for the Senate to pass the bill in full in his State of the Nation Address on July 24.

The House has already approved the excise tax on oil products, imposing a 3-2-1 schedule, or P3 per liter in the first year, P2 in the second and P1 in the third.

Angara said he told Dominguez that the Senate would study the proposal, noting that there was the possibility that the proposed higher tax on fuel could still be reduced.

“We’re still studying the implications,” said Angara, who held on Thursday the last of two hearings for the Tax Reform for Acceleration and Inclusion bills.

Angara said the economic managers also seemed “receptive” to itemizing where proceeds of particular provisions would go in the tax package.

Bigger chance

“They realized that the bill has a bigger chance of being passed if people know where their money will go. Because people would complain of higher taxes when these are being spent on insignificant projects,” Angara said.

Angara said his committee aimed to submit the Senate version of the comprehensive tax package by September.

The Senate has done away with its plan to convene a committee of the whole to grill economic managers on the comprehensive tax reform package, as senators were meeting with them, according to Angara.

He earlier said he found somewhat high the proposed P10 per liter tax on sugar-sweetened beverages. He said the basis for taxing should be the level of sweetness added to a drink and not its sugar volume.