MANILA, Philippines — Lawmakers may consider imposing taxes on junk foods to discourage the consumption of the unhealthy products, while generating additional revenues for the government, according to a state think tank.
In a report, the National Tax Research Institute (NTRC) said the government may look into the possibility of charging up to 20 percent excise tax on junk foods.
“To discourage the bad habit of eating or consuming foods detrimental to the body, especially for the young and the poor, an excise tax at the rate of 10 to 20 percent may be considered,” the NTRC said in a report.
The think tank said applying taxes on junk food would increase the prices of such products, which would in turn, encourage consumers to make appropriate changes in their diet, and manufacturers to think of healthier alternatives.
“Viewed from the perception discouraging the bad habit of consuming junk foods, a higher rate of excise tax is proposed as this will result in high prices and will limit consumers’ consumption thereof,” the NTRC said.
Aside from its health implications, the NTRC said imposing taxes on junk foods would also increase government revenues, which may be used to fund programs that address the health costs of obesity and non-communicable diseases.
The NTRC estimates that excise tax collections from junk foods would reach P36.48 billion from 2020 to 2024 should the tax rate be set at 10 percent.
At 15 percent, the projected excise tax collection from 2020 to 2024 would be P54.73 billion, and at 20 percent, the estimated revenue would be P72.97 billion.
On the other hand, the NTRC also noted that there are also disadvantages to imposing excise tax on junk foods.
For one, the think tank said the definition of junk foods is “very broad and difficult to ascertain.”
The NTRC noted that there are certain junk foods that may be considered as staple food for low-income families, such as instant noodles and dried fish.
“It has also been argued that a junk food tax is a regressive tax, since low-income populations would spend a greater percentage of their annual income on unhealthy food than higher-income individuals,” the NTRC said.
However, the NTRC said low-income individuals may also stand to benefit more from this tax measure.
“It follows then that low-income individuals may be more likely to change their consumption behaviors and experience long-term health benefits,” the think tank said.
“In addition, revenues generated from such a tax, if used for healthy food subsidies and educational programs, could help offset the costs that are borne by low-income consumers,” it added.
Aside from taxing unhealthy foods, the NTRC said policymakers may also consider subsidizing healthy foods, restricting food advertising, and possibly eliminating advertising of junk foods, candies, softdrinks, fast foods, and sugared cereal for children.
Last year, the Department of Health considered the possibility of imposing an excise tax on salty foods and products to curb the high incidence of non-communicable diseases.
The DOH said this is the same strategy the government employed when it taxed sugar-sweetened beverages.
However, some legislators opposed the proposal, saying it may be regressive and “anti-poor.