Sugary drinks may dodge tax hike as Palace compromise

Creative Commons file photo of sugary drinks

Malacañang signaled its willingness to drop the Palace-endorsed tax increase on sugar-sweetened beverages (SSBs) in exchange for retaining the additional P6 excise tax on fuel products as part of a compromise explored by Executive and Legislative officials to facilitate approval of the Duterte administration’s Tax Reform for Acceleration and Inclusion (TRAIN).

Sen. Juan Edgardo M. Angara on Thursday said the compromise was conveyed during a recent Palace meeting between President Duterte and Senate leaders, where the fate of the pending tax bills was discussed.

Interviewed at the sidelines of Thursday’s Senate Ways and Means Committee hearing on the TRAIN bill, Angara clarified it was not Duterte himself who manifested willingness to strike a compromise with Congress on the tax bills.

“No, that is Finance Secretary [Carlos G.] Dominguez III. He was indicating they might be willing to trade the SSB but in exchange for full passage of the higher excise tax on fuel products,” Angara told reporters, referring to the P6 fuel-tax hike that the House passed in increments of P3 for the first year of implementation, P2 in the second year and P1 for the third year.

Asked if the senators would be amenable to the Palace proposal, Angara said he told Dominguez they would need some time to study the options, as senators are also inclined to reduce the P6 fuel excise-tax hike.

Angara assured that the Senate Ways and Means Committee is not rushing to endorse  a compromise bill with the Palace, saying: “We are still studying the implications.”

For instance, Angara affirmed they are well aware of the implications, admitting that “of course, we were contcerned about inflation”.

Even the Palace, he added, has yet to convey a firm position on the possible compromise formula trading SSB for higher fuel-excise tax. “Not yet. We are still at  the discussion point. It was just raised by the finance secretary…’like what do you think?’”

Angara hastened to clarify they were not engaged in “bargaining” in meeting with the Executive officials. “I think it was just a discussion.”

The senator said he was expecting another round of meeting with the administration’s economic managers on the pending tax bills “if not this week, maybe next week”.

At the same time, Angara expressed confidence the Palace economic managers would be “receptive” to earmarking additional revenues from government’s higher-tax impositions. He surmised Palace officials realized there is a bigger chance of passing higher-tax bills if the taxpayers and lawmakers know where the money would be spent.