DOF wants P100-tax on every kilo of single-use plastics

In a bid to combat climate change and promote sustainable practices, the Department of Finance (DOF) wants to impose a P100 tax on every kilogram of single-use plastic bags (SUPs). 

Finance Undersecretary Karlo Fermin S. Adriano unveiled the details of the DOF proposal in a statement released on Monday, March 25, which he described as a win-win solution to reduce plastic waste.

The DOF plan includes the implementation of a weight-based excise tax rate, which is envisioned to simplify tax administration procedures and ensure equitable taxation.

Adriano said the proposed tax would encompass all non-recyclable SUPs, including commonly used bags like "ice," "labo," or "sando" bags, regardless with or without handles.

Furthermore, the DOF wants a four percent annual indexation to be implemented starting from the third year of the SUP tax's enforcement. This measure is intended to account for inflation and maintain the effectiveness of the tax over time.

If the SUP tax proposal is enacted into law, consumers can expect the price of labo bags per piece to rise from P0.47 to P0.82, while sando bags will see an increase from P0.51 to P0.91 each.

Despite the new tax, the finance official said that it would still be one of the cheapest tax rates per bag when compared to other countries. 

For example, the United Kingdom imposes a tax of P326 per bag, Ireland's tax is P12 per bag, Virginia in the USA charges PHP 3 per bag, and Denmark's tax is only P1 per bag.

“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, Adriano said. 

“In the case of single-use plastic, the social cost is mismanaged waste, which is related to climate change,” he added.

The estimated revenues of P31.52 billion expected to be generated from 2025 to 2028 will be allocated to the Department of Environment and Natural Resources (DENR) for solid waste management program in municipalities.

According to the World Bank, the Philippines ranks as the third-largest contributor of mismanaged plastic entering the ocean annually, with a staggering 750,000 metric tonnes.

Plastics have been identified to emit greenhouse gases (GHG) throughout their lifecycle, from production to disposal.

Hence, the country's susceptibility to climate change poses a significant risk, potentially resulting in a loss of 13.6 percent of its economic output by 2040 if left unaddressed.

“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 G. 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.