Philippines Considers Excise Tax on Ice Cream, Froyo to Boost Revenue, Health

The Department of Finance (DOF) is considering expanding the coverage of the country's sweetened beverage tax to include edible ices such as ice cream and frozen yogurt. This proposal is part of the "ProGRESS bill," aiming to balance revenue generation with public health promotion. Under the DOF's proposal, new taxable categories would include dairy and plant-based ice creams, ice milks, water-based ices like sorbetes and ice lollies, and flavored and unflavored frozen yogurts. The current excise tax on sweetened beverages with caloric or noncaloric sweeteners is P6 per liter, with a proposed increase to P20. Taxes on drinks with high-fructose corn syrup are also slated to rise from P12 to P40 per liter. Furthermore, the DOF is looking to remove the exemption for 100% natural fruit juices and 100% vegetable juices with no added sugar, which are currently not covered by excise taxes under the Tax Reform for Acceleration and Inclusion (TRAIN) Law. However, plain milk and milk drink products without added sugar, all milk products, medically indicated beverages, unsweetened tea, and three-in-one and ground coffee will remain exempt. DOF Undersecretary Karlo Fermin Adriano stated that while the department initially considered removing exemptions for three-in-one and flavored milk products, they recognized their significant use among the poor and in government nutrition programs. He emphasized the need for annual indexation of the excise tax rate for sweetened beverages to inflation, similar to alcohol and tobacco taxes, to ensure its real value is maintained and health goals are met. "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," Adriano said. The DOF projects that these tax reforms could generate an average of P74.7 billion annually from 2027 to 2030. It is also anticipated to reduce sweetened beverage consumption by 27.2%, from 7.272 billion liters to 5.295 billion liters, encouraging a shift towards healthier options. This initiative is part of the government's broader strategy to offset anticipated revenue losses from President Ferdinand "Bongbong" Marcos Jr.'s tax relief promises. With rising consumption of sweetened beverages and processed foods in the Philippines, the proposed tax hikes are expected to spark further debate on public health and fiscal policy. Source: GMA Money Philippines