‘Reasonable’ rate key in salt-sugar tax: Koko


SENATORS have no consensus yet on whether to consider, or even prioritize, a proposal by the Executive to impose, ostensibly for health and economic reasons, a combination salt-and-sugar tax measure amid a tight fiscal space and rising cases in noncommunicable diseases linked to poor nutrition.

At least two senators indicated to BusinessMirror they are keeping a wait-and-see attitude on the twin moves to impose tax on snacks or junk food with high salt levels, while increasing existing tax rates on sweetened beverages, as mandated under the TRAIN law.

Sen. Imee Marcos said, in an SMS to BusinessMirror, “I have to see the bill first,” when asked if she was ready to support a measure pitched by the Departments of Finance (DOF) and of Health (DOH), as announced by Secretary Benjamin Diokno.

Minority Leader Koko Pimentel said he is keeping an “open” mind to the concept of imposing a so-called salt tax on junk food and hiking the existing tax on sweetened beverages, but he said, he will watch closely the proposed rates to ensure they don’t have the effect of “killing” businesses.

In an interview with DWIZ’s Cely Ortega Bueno at the weekend, Pimentel was asked to weigh in on whether he agreed that the proposal, announced last Wednesday by Finance Secretary Diokno, would yield health and economic benefits, and if it was timely.

“We keep an open mind on that because the tax proposal will definitely come from the administration so we have to read their version,” Pimentel said partly in Filipino, adding that he will track two things: the concept of the tax and the rate proposed.

He stressed that the rate proposed must be “reasonable” and will not “kill the business of manufacturing those products. We’re just talking regulation

here; the tax must not be so heavy that they will be forced to close.”

He added,  “that is what’s called reasonableness.”

Wealth or luxury tax?

Asked if he agreed with some views that before taxes on sweetened beverages and  junk food, the government should first consider increasing taxes on the wealthy via a wealth tax, Pimentel said “I already have a draft of that [wealth tax proposal] which someone submitted and which we are studying. The question there is, would that be imposed just once, or yearly?’

Another point to consider, he added. is the cutoff  for including wealthy persons under the coverage of the law.

“That [threshold amount] determines whether you will be subject to tax. So those are the points we are studying; also, what countries have this wealth tax and whether or not their experience was successful,” Pimentel added.

The minority leader said it is possible he could file the wealth tax bill in the Senate, but conceded, “this is a difficult concept,  as there may be a tax refund, etc. so it’s quite complicated.”

Pimentel, meanwhile, disputed the notion that the TRAIN law passed in 2018 already had this objective of imposing higher rates on the wealthy.

“No, we even brought down taxes [under TRAIN]. The TRAIN Law actually lowered income taxes, rates, corporate taxes, even vehicles, the luxury vehicles. I proposed a higher rate [for luxury cars], but of course, I did not get my way,” said Pimentel, speaking partly in Filipino.

He said this is one reason why some people would rather push a luxury tax, first instead of a wealth tax. “With a luxury tax, the taxpayer decides to buy a luxury item, so he pays a luxury tax. That’s different from a wealth tax. With a wealth tax, whether you like or not, because you are super rich, they will tax you.”

Earlier, the House Ways and Means panel chief, Albay Rep. Joey Salceda, had said they are still awaiting any Executive-endorsed measure on a salt-and-sugar tax combo. A query by BusinessMirror to Salceda’s Senate counterpart, Sen. Sherwin Gatchalian, has gone unanswered as of press time.

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