The Department of Finance’s (DOF) proposed excise tax on single-use plastics (SUPs) is seen to yield P33.86 billion until 2028.
Based on a presentation to stakeholders as shared by the DOF yesterday, the DOF’s proposed measure is expected to generate P2.33 billion in year one, assuming that the implementation will begin in the third quarter of 2024 and with 50 percent tax compliance.
Meanwhile, the projected incremental revenue from years two to five are P6.96 billion, P7.41 billion, P8.16 billion and P8.99 billion, respectively, assuming a tax compliance rate of 70 percent.
The proposed measure seeks to curb the high volume of mismanaged plastics in the country and serves as the Philippines’ contribution to the global movement of reducing pollution and adopting more sustainable practices while raising revenues to spur economic growth.
“When a good has some negative externalities, meaning the consumption or use of a product causes some social cost, we try to regulate that through taxation. In the case of single-use plastic, the social cost is mismanaged waste, which is related to climate change,” DOF fiscal policy and monitoring group officer-in-charge, undersecretary Karlo Fermin Adriano, explained to stakeholders in a recent briefing.
The DOF proposes a weight-based rate for easier and fairer tax administration, wherein a P100 per kilogram excise tax on SUP bags will be imposed with a four percent annual indexation beginning the third year of implementation.
Compared to other countries, the DOF said the Philippines has one of the cheapest tax rates per bag at P0.40 – a stark contrast from the United Kingdom’s P326 per bag; Ireland’s P12; Virginia, USA’s P3; and Denmark’s P1.
The proposal covers SUP bags that are not recyclable, such as “ice” “labo” or ”sando” bag, with or without handles.
Under the DOF’s proposal, the price of labo bags per piece will slightly increase from P0.47 cents to P0.82, while sando bags will be priced at P0.51 to P0.91 each.
The P31.52-billion estimated revenues to be generated from 2025 to 2028 shall be earmarked for the Department of Environment and Natural Resources’ solid waste management program in municipalities, the DOF said.
“It is the government’s duty to raise awareness on the impact of non-recyclable plastics and the irreversible effects of climate change. I believe this is where strong policy intervention is needed,” Finance Secretary Ralph Recto said.
“This is a low-hanging fruit that has been on the table for more than a decade. I am confident that our legislators will support this measure,” he added.
