EXCISE taxes on salty snacks and fast food products could raise up to P72.97 billion on average in fresh revenue for the government each year, according to the National Tax Research Center (NTRC).
Assuming a 20% excise tax on the “junk food” category, the NTRC estimated that the government could raise P61.57 billion in 2020, P66.8 billion in 2021, P72.49 billion in 2022, P78.65 billion in 2023 and P85.34 billion in 2024, or an average of P72.97 billion a year.
The search for revenue to pay for the coronavirus containment effort could revive stalled initiatives to tax the category, after Congressional opposition derailed the effort last year.
The findings were detailed in an NTRC study, “Feasibility of Imposing a Junk Food Tax in the Philippines.”
At 15% excise, it said collections could average P54.73 billion annually, or P46.18 billion to be generated in 2020, P50.1 billion in 2021, P54.36 billion in 2022, P58.99 billion in 2023 and P64.01 billion in 2024.
At 10%, the take will average P36.48 billion a year, or P30.78 billion in 2020, P33.4 billion in 2021, P36.24 billion in 2022, P39.33 billion in 2023 and P42.67 billion in 2024.
The NTRC based its estimates on the projected gross income of manufacturers of snack products and fast food chains and a growth assumption of 8.5% annually.
The higher prices due to the new tax would “encourage consumers to make appropriate changes in their diet because they can no longer afford the expenses associated with junk food reliance.”
“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% may be considered,” according to the study, published in late 2019.
NTRC backed a tax by category of food rather than one based on content like saturated fat and sodium, since manufacturers can update or modify the production processes to avoid tax.
It noted some support for taxes of at least 20% “to have a significant impact on obesity and cardiovascular disease.”
However, NTRC also said classifying products as “junk food” may pose difficulties as some cheap and accessible products are considered staples by many families.
The Health department first floated the idea of imposing taxes on salty foods and in the second half of 2019 when the country’s salt consumption of 11 grams of salt per day was found to be more than double the five grams of salt per day recommended by the World Health Organization (WHO).
“However, several legislators (said) 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 said.
The NTRC said the government can also consider subsidizing healthy foods, restricting food advertising for junk food, candy, soft drinks and fast food. — Beatrice M. Laforga
