It is easier to levy taxes at the point of sale of goods rather than to rely on the correct declaration of would-be taxpayers and wait for them to pay up during the annual tax season. The government’s fiscal authorities know this.
It is also easier to collect taxes on relatively small transaction values—like everyday food purchases from restaurants or groceries—than to wrestle with large taxpayers such as big corporations or wealthy individuals aided by expensive tax lawyers. The fiscal authorities also know this.
But knowing these realities does not give the Department of Finance (DOF) the right to take the lazy route out of the Marcos administration’s challenging revenue needs by further wringing hard-earned money from the toil and sweat of working-class Filipinos, instead of collecting more taxes from wealthier members of society who have greater power and discretion to avoid paying the proper amounts.
Such is the case with the proposal of the DOF to raise taxes further on food that exceeds official health thresholds for fat, salt, and sugar content.
Under this proposed scheme, the DOF wants Congress to pass a measure imposing a P10 tax for every 100 grams or milliliters of prepackaged food that ostensibly “lack nutritional value,” while sweetened beverages are proposed to be taxed an additional P12 per liter.
As if this weren’t enough, fiscal officials led by Finance Secretary Benjamin Diokno want these tax rates to increase by four percent annually in an attempt to broaden the country’s tax base in order to collect an estimated P76 billion in additional revenues in the first year of the measure.
The proposed measure is being pushed in tandem with the Department of Health which is providing the justification for the move, saying that more expensive “junk food” will help reduce obesity among Filipinos and reduce the danger of diabetes among the populace.
This proposal is similar to the justification made by the Duterte administration when it pushed for new taxes on tobacco and alcohol products or the so-called sin taxes.
But there is one crucial difference: Most of the underprivileged Filipinos could do with less consumption of cigarettes or liquor. In fact, most would be better off without them. But the same cannot be said for depriving these very same underprivileged Filipinos of the instant noodles or soft drinks that provide them with the carbohydrates and sugar they need to get through their workdays.
It is one thing to make tobacco and beer more expensive for a Filipino laborer or factory worker, but it is another thing entirely to put basic food items—the very fuel they need to earn their meager wages—farther from their reach, whether bought from fast-food chains or convenience stores.
Thankfully, Albay Rep. Joey Salceda, whose House of Representatives committee on ways and means is the citizens’ first line of defense against this ill-conceived plan, has voiced his reservations against what he described as a “regressive” proposal.
And while fiscal authorities are trying to win over public opinion by presenting these new taxes as a health measure, the lawmaker has very wisely opted to seek out more empirical evidence to validate DOF’s rationale.
More importantly, Salceda pointed out that the Philippines has a bigger malnutrition problem, especially among the poor, than an obesity problem which the DOF is ostensibly trying to address.
Make no mistake about it, the government needs to raise more revenues to sustain the country’s recovery in the wake of the greatest economic devastation it has experienced in 2020 since the end of World War II.
Roads have to be built, infrastructure has to be improved, government debts piled on by the previous administration have to be repaid, social services have to be delivered, and yes, health services have to be increased.
But there is a right way of raising more taxes, there is a wrong way, and there is a lazy way. The DOF’s proposal to raise taxes on salty food and sweetened beverages is both wrong and lazy.
The government must implement programs to address various health issues, be it obesity, hypertension, or severe malnutrition and stunting among Filipino children, but doing this by raising taxes on food most affordable to the poor simply leaves a bad taste in the mouth.
If the administration’s economic managers are serious about raising more money for the state’s spending needs, it must redouble its efforts to dramatically improve tax collection efficiency, run after tax evaders, run after smugglers, and reduce waste and corruption in government.
If, after all this, the DOF is still intent on raising tax rates, it should do so starting with measures that will impact wealthy Filipinos more than the middle or lower classes.
It is all too easy to try and squeeze more money out of citizens who have no choice or no power. But the challenge for our fiscal authorities is to collect more taxes from those who really owe them and are getting away with paying little or none at all.