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DOF willing to drop sugar tax with conditions

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By Chino S. Leyco

The Department of Finance (DOF) is amenable to dropping the proposed levy on sugar-sweetened beverages as long as lawmakers will pass the tax reform version filed by Senate President Aquilino L. Pimentel III.

Finance Secretary Carlos G. Dominguez III said late Friday that they are willing to remove the proposed R10 per liter excise tax on sugar-sweetened beverages under the Duterte administration’s first tax reform package.

He explained the tax on sugar-sweetened beverages was not part of the initial tax reform plan, adding the House lawmakers were the ones who included it in the package after they moved to water down the DOF’s original proposed bill.

Dominguez said he has already conveyed this proposal to Senate Committee on Ways and Means Chairman Juan Edgardo M. Angara during their recent meeting.

 “What I told Angara was I am willing to drop the sugar tax but pass the original bill that was filed by Senator Pimentel. You don’t have to pass it [sugar tax] this time… you don’t have to pass it at all,” Dominguez told reporters.

“You pass that [Pimentel tax reform bill], take out the sugar tax,” the finance chief pointed out, noting the Senate should also approve the higher levy on gasoline and impose excise tax on diesel.

Pimentel’s tax reform measure, or the Senate Bill (SB) No. 1408, is almost similar to House-approved Bill 5636, but does not include the sugar tax and other complementary measures approved by the lower chamber.

Based on DOF estimates, the version approved by the House of Representatives could yield P1.163 trillion in net revenues from 2018 to 2022, while Pimentel’s SB 1408, without the complementary measures like the sugar tax, could generate P998 billion during the same period.

But, if the Senate adopts Pimentel’s proposal and includes the complementary measures of the House, SB 1408 is greater in terms of net revenues as it could raise P1.334 trillion in taxes starting next year until 2022.

Finance Assistant Secretary Maria Teresa S. Habitan, meanwhile, said the DOF may still include the proposed tax on sugar-sweetened beverages under the “health package,” or the fifth and last tax reform bill.

“The sugar tax was not originally in package one, [it is] package five together with the other health taxes. It will be returned to package five… but it’s really up to the Senate,” Habitan said.

Both HB 5636 and SB 1408 aim to lower personal income tax (PIT) rates along with several revenue-enhancement measures to make up for the anticipated reduction in tax collections resulting from the hefty income tax cuts.

These accompanying tax reforms include adjusting excise taxes on fuel and automobiles and broadening the value-added tax base by limiting exemptions to raw food and other necessities such as health and education while keeping the current zero-tax privileges of senior citizens and persons with disabilities.

During his second State-of -the-Nation Address, President Rodrigo R. Duterte asked the Senate on Monday to approve his tax reform package in full to finance his administration’s ambitious P8-trillion infrastructure plan.

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