Industry groups oppose tax on single-use plastics

Industry groups on Tuesday pushed back against a proposal to impose an excise tax on single-use plastics, saying the suggested levy is unfair, could make goods expensive and lead to job losses.

“The proposed tax is discriminatory,” Benjamin So Chua, president of the Philippine Plastics Industry Association, told lawmakers at a House of Representatives hearing. “And it is regressive, increasing consumer costs disproportionately on low-income households.”

There are nine pending House bills proposing an excise tax on single‑use plastics, with the tax rate ranging from PHP 100 to PHP 150 per kilogram of plastic bags. The excise tax would then be increased by 4% every year to discourage the use of single-use plastics.

“The market price of our plastic products is PHP 90 per kilo… if you add another PHP 100 per kilo, that will more than double the price. When we add PHP 150, it will become around three times the cost,” Mr. Chua said.

“This will definitely result in demand destruction and loss of employment to our industry,” he added.

The Philippines has one of the cheapest tax rates for single-use plastics compared to other countries at PHP 0.40 per bag, the Department of Finance (DoF) said last year.

However, the Philippines is considered one of the biggest sources of plastic waste in the world. World Bank data showed the Southeast Asian nation as the third-largest contributor of mismanaged plastic in the ocean annually.

The proposed plastic tax is part of the Marcos administration’s legislative wishlist for the 20^th Congress. A similar measure was approved on final reading by the House in 2022, but a counterpart bill at the Senate failed to be approved.

Finance Undersecretary Karlo Fermin S. Adriano said the proposal is primarily not a tax bill but an environmental measure, aimed at curbing the widespread use of plastic bags in one of the world’s most plastic‑reliant and heavily polluted countries.

Plastic pollution costs the government about PHP 70 billion per year, he added. “What we’re going to collect, if we follow a PHP 100-per-kilogram excise tax, is only around PHP 8 billion.”

“The revenue we’re going to collect from the excise tax is significantly smaller than the current economic cost of plastic pollution,” Mr. Adriano told lawmakers at the same briefing.

But there is no alternative to plastics as a major packaging material that is both cheaper and more reliable,” Joseph R. Fabul, director of the Philippine Chamber of Food Manufacturers, said.

“There is no commercially viable large-scale alternative that matches the safety barrier and logistics functions at comparable costs,” Mr. Fabul told the same hearing.

Mr. Adriano said the plastic tax measure’s intent is for producers to pass the levy onto consumers to curb the use of plastics.

“It will be burdensome, particularly for the poor,” said Mr. Adriano. “But we would also like to note that this income decile is the most vulnerable to climate change and its impact. When there are floods, they are the ones who cannot recover.”

The Philippines is among the world’s most disaster-prone countries, with storms and monsoon rains routinely inundating towns and cities. The Southeast Asian nation was hit by 22 storms this year, with a series of strong typhoons in late October leaving hundreds dead and causing billions of pesos in damage.

“That’s why we are imposing this excise tax, so that consumers in general will internalize the cost of all these environmental effects and impacts,” Mr. Adriano said.

The DoF is looking to expand the type of plastics covered under the proposed measure, he added. “Previously, the proposal only covered plastics, specifically sando bags and labo bags.”

“We’re just finalizing the details, like the design, which includes, among others, the tax rate and the coverage,” he said.

The House Ways and Means Committee has formed a technical group to refine the bill’s provisions, particularly the tax rate and plastic type coverage, panel chairman and Marikina Rep. Romero S. Quimbo said.

Analysts said the proposal could stoke inflation in the short term, as many basic commodities rely on plastic for packaging.

However, John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said prices of items that use plastic packaging will likely go up due to the excise tax.

“The tax would raise the cost of plastic-packaged goods, and firms may pass on part of that cost to consumers especially for items like bottled drinks, sachet products and convenience foods,” he said in a Viber message. “However, the overall impact on inflation may be small, since the tax targets only a narrow segment of goods and consumers can shift to cheaper, reusable, or non-plastic alternatives.”

“In the long term we may expect a shift towards sustainable packaging, especially if competition calls for it,” Reinielle Matt M. Erece, an economist at Oikonomia Advisory & Research, Inc., said in a Viber message. “This shift is good both for the environment as well as economically.” — Kenneth Christiane L. Basilio, Reporter