Taxation in the Philippines is governed chiefly by the Constitution and three Republic Acts. And the most notable provision is articulated in Article VI, Section 28 of the Philippine Constitution, which states that “the rule of taxation shall be uniform and equitable” and “Congress shall evolve a progressive system of taxation.”
I may not be a lawyer, but in my layman’s understanding of this Constitutional provision, taxation in the Philippines must be homogenous and fair. Thus, I cannot rationalize why a proposal to impose tax on foods for their content and for supposedly having zero-nutritional value and branding them as “junk food” is being pushed at the Senate to raise more Covid-19 funds for the government.
What are these so-called junk food anyway? Are these the mami noodles and “chichiriyas” like potato chips, banana chips and peanuts, among others, that most poor Filipinos eat, especially the school children who can’t afford to have burgers for their baon?
But most of these foods have already been fortified with vitamins and nutrients because of Republic Act No. 8976, otherwise known as the Food Fortification Act of 2000. In fact, even prior to the Act, I had the mami noodle fortified with iron when I handled its marketing years back. So, are these foods still considered “junk” under the proposed legislation?
Branding them as junk food, like their strategy when our legislators softened public resistance and tamed opposition to the House measure seeking to impose a levy on cigarettes and alcoholic drinks by branding them as sin products, followed by the subsequent passing of the Sin Tax Law, I would not be surprised to wake up one morning with a new tax burden on supposedly junk food and calling the additional burden “junk food tax.”
Perhaps, the proponents of the bill to tax junk food are trying to avoid a similar situation that happened during the 17th Congress when the “Asin Tax,” a proposed legislation to tax salted foods for health reasons, was withdrawn after getting strong opposition at the House for allegedly being anti-poor.
In our discussions with former Senate President Juan Ponce Enrile during our radio program “Dito sa Bayan ni Juan” on July 18, 2020, we examined the issue on the proposed levy on junk food. And Enrile, who is a Harvard University Master’s degree holder in Taxation, explained that taxing only certain products for their content and not taxing other food items that have the same content would be tantamount to unequal taxation. This is definitely a violation of the constitutional provision on equal protection of law.
Thus, in light of the sufferings of the poor Filipinos because of this pandemic, with many of them practically struggling to survive after losing their jobs due to the closure of factories and businesses, maybe our legislators can find other ways to raise Covid-19 funds for the government, instead of putting additional burden on the poor with a new junk food tax.
According to the Department of Labor and Employment (DOLE), of the 3,000 businesses and factories that manifested their plans to shut down operations because of Covid-19, over 200 of them have already folded up. Thus, I find it untimely and inappropriate to impose a new tax burden on an already struggling Filipino nation, especially the poor, who would suffer most under the proposed tax on junk food.
Moreover, the government is losing over P250 billion in potential revenues due to smuggling. If this is properly addressed, it could increase the market share of local businesses in the Philippine economy to the tune of trillions of pesos or even more. Is this not a better solution for the government to adopt? Stop smuggling and we can definitely raise more Covid-19 funds while protecting local businesses at the same time.
Dr. Jesus Lim Arranza is the chairman of the Federation of Philippine Industries and Fight Illicit Trade; a broad-based, multisectoral movement intended to protect consumers, safeguard government revenues and shield legitimate industries from the ill effects of smuggling.