DOF wants excise taxes on ice cream, froyo

Ice cream, frozen yogurt, and other edible ices could face an excise tax under the Department of Finance’s (DOF) proposal to expand the coverage of the country’s sweetened beverage tax.

Under the DOF proposal, edible ices such as dairy and plant-based ice creams and ice milks; water-based ices such as sorbetes and ice lollies; and flavored and unflavored frozen yogurts will be a new product category subject to the sweetened beverage tax.

The DOF is also looking to remove the exemption for 100% natural fruit juices and 100% vegetable juices with no added sugar, as these are not currently covered by the excise taxes mandated by the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

Excise taxes on sweetened beverages are currently set at P6 per liter for options with caloric or noncaloric sweeteners. The DOF aims to raise this to P20. Additionally, taxes on drinks with high-fructose corn syrup are P12 per liter and are planned to be increased to P40.

Excluded from such taxes are plain milk and milk drink products without added sugar, all milk products, medically indicated beverages, 100% natural fruit and natural vegetable juices, unsweetened tea, and three-in-one coffee and ground coffee.

DOF Undersecretary Karlo Fermin Adriano said that the department initially aimed to eliminate the exemption for three-in-one and flavored milk products. However, they realized these were primarily used by the poor and in government nutrition programs.

“We’re open to removing the exemption, and we will defer to the Department of Health for the coverage of the SB tax,” he said in a House briefing.

The DOF is also proposing to adjust the excise taxes annually by 5%, saying it is the only sin tax whose rate is not currently indexed to inflation, as alcohol excise taxes are raised by 6% annually, and tobacco by 5%.

“In regards of do we want them to be phased out? Hindi naman po. Hindi rin naman po ito nangyari sa ibang sin products, kasi nga po meron po ito sa alcohol at meron din naman po ito sa tobacco. We have seen that in this sector, nag-i-increase pa rin naman po ‘yung business nila at mga profit,” he said in a House briefing.

“Ang atin nga lang po talagang goal dito, ‘yung annual indexation in particular, is to ensure na hindi ma-e-erode ng inflation ‘yung excise tax for them and to ensure na mahi-hit natin ‘yung ating mga health outputs and ‘yung mga health goals,” he added.

(In regards of do we want them to be phased out, no. This has not happened with other sin products, because this is also in other sin products such as alcohol and tobacco. We have seen that in this sector, their business and profit continue to grow.

Our main goal here, particularly with annual indexation, is to ensure that inflation does not erode the value of the excise tax and to ensure that we achieve our health outcomes and health goals.)

Should the proposal be approved, the DOF expects P63.26 billion in revenues in 2027, P70.52 billion in 2028, P78.39 billion in 2029, and P86.95 billion in 2030, for an average of P74.7 billion.

It is also expected to cut down consumption of sweetened beverages by 27.2%, bringing the volume to 5.295 billion liters from 7.272 billion.

The proposals are part of the DOF’s ProGRESS bill proposal, or Promoting Growth, Revenue, and Equity towards Socio-Economic Sustainability, in a bid to offset anticipated revenue losses from President Ferdinand “Bongbong” Marcos Jr.’s tax relief promises.

Marcos, in his fifth State of the Nation Address (SONA) in July, called on lawmakers to raise the personal income tax exemption ceiling to P350,000 per year from the current P250,000. —AOL, GMA News