Coffee, milk will not be covered by excise tax


THE Department of Finance has agreed to the call of senators to exclude three-in-one coffee mixes and milk from the list of items that will be covered by the proposed excise tax on sugar-sweetened beverages.

Senator Juan Edgardo “Sonny” Angara said the Senate ways and means committee that he heads is finalizing its report on the proposed comprehensive tax reform program being pushed by the executive branch.

Angara said in an interview that the Finance department, during the last public hearing on the Tax Reform for Acceleration and Inclusion or Train, agreed to remove coffee mixes and milk from the proposed P10 per liter excise tax on sugar-sweetened beverages.

Senators opposed the inclusion of the two products, saying coffee mixes are consumed mostly by poor consumers.

The tax reform measure recently passed by the House of Representatives includes a provision imposing a P10 excise tax on every liter of sugar-sweetened beverages containing locally produced sugar, while others will be taxed P20 per liter.

Sugar-sweetened beverages include juice drinks, tea and coffee, carbonated beverage with added sugar, flavored water, energy drinks, sports drinks, powdered drinks not classified as milk, juice, tea and coffee, cereal and grain beverages and other non-alcoholic beverages that contain sugar.

If the bill becomes law, the price of 1 liter of Coca-Cola will increase from P22 to P34; the sachet prices of powdered drinks Nestea, Tang or Eight O’ Clock will increase from P9 to P20.

Angara said the Department of Finance also agreed to lower the rate from P10 to P5 per volume liter on the condition that the revenues that would be lost from the amendment would be recovered elsewhere.

The sugar tax is one of the several proposals in the first package of the tax reform program of the government that also include amendments to the personal income tax expansion of value added tax (VAT) base and limiting VAT exemptions and automobile and petroleum excise tax.

Under the proposal, an additional P6 to the P4.30 per liter excise tax will be imposed on gasoline and P6 per liter on diesel.

House Bill 5636 retained Malacañang’s excise tax proposal on oil products spread in three years — P3 for the first year, P2 for the second and P1 for the third year.

Angara said several senators still consider the rates too high.

The Senate is trying to find a balance where government can generate revenues to fund infrastructure programs without putting too much burden on consumers.

The DOF expects to generate P82 billion to P130 billion from the tax reform package.


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