Industry opposes excise tax on plastic bags

Published June 10, 2021, 7:00 AM

by Bernie Cahiles-Magkilat

The domestic plastics industry has opposed a bill that seeks to impose P20 excise tax for every kilo of plastic bags removed from the Customs territory or from a factory and called for a  win-win solution that will protect jobs and local manufacturing.

In a statement, the Philippine Plastics Industry Association (PPIA) cited the several points against House Bill No.  9171 that will severely affect many industries, and the overall economy. 

PPIA President Danny Ngo has called for an Economic Impact Assessment before passing the bill since many industries will be severely affected, and the overall economy as well resulting in higher costs of products.

Photo credit: http://www.philippineplastic.com/index.html

Ngo pointed out that the projected P4.867 billion revenue from the excise tax collection cannot be guaranteed as the affected local producers’ business becomes unviable once the law is passed.

Instead, PPIA has called for win-win solutions like recycling without compromising the industry, society, and economy.

Ngo pointed to a study conducted by the World Bank Asia Pacific which showed that plastic can be a potential source of revenue.

The  World Bank Asia Pacific Study Team in its findings released last March said that the Philippine economy is losing up to $890 million a year due to the untapped potentials of plastic wastes converted for recycling for a circular economy. The study reveals that only 28 percent of the key plastics are recycled back into resins in 2019. If totally utilized, the total material value they said could amount to $1.1 billion or about P55 billion. 

“This is eleven times greater than the estimated tax collection revenue from this proposed measure of P4.867 billion, which could not be realized when the affected producers’ business becomes unfeasible when this law is passed,” said Ngo.

“It is therefore important for lawmakers to legislate laws that would strengthen and enhance plastic recycling, rather than taxing or banning our product,” added Ngo.

Ngo pointed out that the proposed bill encompasses not only the plastic producers and traders, but all the industry users of plastic bags as primary and secondary packaging, like processed or frozen foods, hygiene, and health care, medical and pharmaceutical products, and all agricultural and agro-industrial commodities, including products for export, also as the safest, stronger, and most hygienic material for transporting goods.

The entire domestic retail and micro-businesses on the use plastic carrier bags and all consumers will shoulder the higher costs. 

‘This does not spare even the smallest outlets like sari-sari stores that are about over 1.3 million that are mostly located in the impoverished areas,” PPIA said.

The group is also alarmed that this measure would severely affect the informal sector like the vendors. The International Labor Organization (ILO) in 2013 stated that the Philippine informal economy, including micro-retailers vendors, make up 72.5 percent of employment in the Philippines. Everyday street and “talipapa” items are bought by consumers at low prices and as many who engage in this for a living would attest, it is “isang kahig, isang tuka”, as the Filipino idiom goes. It is a poor man’s bag. So why tax it?

 Ngo also said the bill failed to justify and articulate why plastic carrier bags are being singled out with an excise tax. The Associated Labor Unions-Trade Union Congress of the Philippines supports the local plastic manufacturers as they deemed the bill will be killing the industry and cutting jobs. 

“This is paradoxical as jobless Filipinos soar to 4.14M amid lockdowns with the fall of the country’s national unemployment rate to 8.7% in April this year,” he said.

In the same press statement, the Federation of Philippine Industries described the measure as “discriminatory”. The Federation questioned “Why should we single out plastic bags for an excise tax when any carrier bags could also be potential waste items? If the spirit of this bill is anchored on the premise that it will reduce waste significantly, then it is indeed discriminatory. The PPIA president further said they are one with the government when it comes to saving the environment. “For more than four decades, the plastic industry has been recycling waste plastics, but could not fully realize its goals due to gaps in the value chain. The industry could not do it alone but needs the assistance and collaboration of the government, the NGOs, and the consumers,” he concluded.

 
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