MANILA (Bloomberg): The Philippines wants to impose higher taxes on products that cause health problems, including soft drinks, e-cigarettes and alcohol, to more than offset losses from President Ferdinand Marcos Jr.’s pro-consumer measures.
Department of Finance officials, in a congressional hearing on Tuesday, pitched increasing levies on sugary drinks and introducing new taxes on ice cream and natural fruit juices. It’s also seeking higher taxes on vapor products, e-cigarette devices and distilled spirits.
The measures are intended to regain revenue that will be lost from Marcos’ pro-consumer proposals, which include raising the ceiling for take-home pay the government doesn’t tax.
The finance department expects an average revenue gain of 48 billion pesos ($785 million) annually in the next four years from the proposed tax measures after deducting losses from tax relief, Undersecretary Karlo Adriano told lawmakers during Tuesday’s hearing.
The president is championing relief measures as households that power the consumption-driven economy reel from high prices of goods due to energy disruptions caused by the Iran war. Debt watchers earlier warned of risks to the nation’s fiscal health if these measures don’t come with revenue-positive proposals.
The government is also considering an increase in the tax rate for luxury goods from 20% to 25%, and to start imposing levies on private jets. It also proposed taxes on plastics and a higher excise tax on automobiles.
Proposed revenue-eroding measures will likely lead to 81.7 billion pesos in annual foregone revenue, but the push for higher taxes on sugary drinks, liquor, soft drinks and luxury items would yield as much as 130 billion pesos, according to finance department estimates.
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