Duterte gov’t eyes junk food tax

The Duterte administration is eyeing a tax on junk food and an additional levy on gasoline and other oil products.

In a television interview, incoming finance secretary Carlos Dominguez III said he would like to impose a tax on food products that “are obesity- and diseasecausing,” including junk food.

He said the imposition of a tax should “discourage people from consuming these food items” for their own health.

Dominguez would like such food items included in the coverage of

the so-called sin tax law, which covers cigarettes, liquor and other tobacco and alcohol products.

He did not say what junk food he would like to be taxed.

As for oil products, the incoming secretary would propose the imposition of an ad valorem (added value) tax.

At present, these products, except for kerosene, are levied a specific tax per liter.

Dominguez apparently wanted new sources of revenues that would offset expected losses from the indexation of income tax rates due to inflation. Indexation is one of the legislative priority measures of the next administration.

He said income tax rates have remained the same since 20 years ago when the tax code was enacted, pointing out that the P500,000 income that was subjected to the maximum rate of 32 percent then is probably worth P1 million today.

“This means that the P1 million should probably be the threshold for the maximum rate,” Dominguez said.

He also proposed that the top rate be reduced to 30 percent.

Duterte’s finance chief frowned upon the proposal of outgoing Finance Secretary Cesar Purisima for a comprehensive tax reform.

“They had six years to do it and they didn’t do it. Why pass it on to us?” he asked, as he opposed Purisima’s proposal to increase the 12-percent value added tax (VAT) to 14 percent.

He said a VAT hike would hit the poor more than the rich.

Dominguez’s colleague in the next administration, budget secretary-designate Benjamin Diokno, is a proponent of a combination of income tax reduction and VAT increase.

According to Diokno, reducing income tax would give people more money, which they could save to avoid a higher VAT.