HOR Approved P20 per kilo excise tax on plastic bags

House Bill No. 220, "An Act Imposing Excise Tax on Plastic Bags, Thereby Adding A New Section, Designated As Section 150-C, In The Internal Revenue Code Of 1997, As Amended," was approved on its first deliberation by the Lower House Committee on Ways and Means on 17 August 2022.

The bill proposes a twenty-peso (P20.00) excise tax on every kilogram of plastic bags removed from the production point or released from the customs territory. The proposed law defined plastic bags as secondary-level plastics made of synthetic or semisynthetic organic polymers, commonly known as "labo" or "sando" bags, with or without handles, used as packaging for goods or products. However, according to Vice Chairwoman Suansing, biodegradable and compostable bags are not included in the measure.

House Committee Chair Hon. Joey Sarte Salceda said the proceeds estimated at P1 billion per year will be used to implement the country’s solid waste management. 

PPIA Pres. Aaron Lao said that the proposed excise tax would be a double burden on the plastics industry together with the newly enacted Extended Producer Responsibility (EPR) law. Both measures will only be passed-on costs to consumers. 

The Phil. Amalgamated Supermarkets Association Pres. Mr. Steven Cua stated that the proposed tax though intended to augment government revenue would neither encourage consumer awareness nor social responsibility on the part of the public.

Phil. Retailers Association Vice Chair Mr. Roberto Claudio inquired whether the bill would supersede the local government ordinances prohibiting plastic bag use, as retailers, especially small businesses, are having trouble transitioning from plastic to paper bags.

Minority Representative Hon. Arlene Brosas hoped for a mechanism that would prevent the excise taxes as passed cost to consumers. 

Apart from the above lawmakers and industry representatives, also present during the hearing were Committee Vice Chairperson and author Mikaela Angela Suansing, Majority Representative Marvin Rillo, and representatives from the Packaging Institute of the Philippines (PIP), and
Philippine Food Manufacturers Inc. (PFMI).

On August 31, 2022, PPIA has submitted its formal position paper to the members of the House Ways and Means Committee and concerned government agencies such DOF, DTI, BIR, DENR, BOC, and NTRC. 

The position paper reiterated the argument that the proposed bill is anti-poor because the excise tax on plastic bags would be passed on to consumers. The Bill ignored that most plastic bags are made domestically. This will lead to layoffs, plastic bag factory closures, and tax revenue loss. There would be double regulation of plastic bags and "labo" under both this excise tax and the ERP Law. The above house bills are discriminatory because they only tax plastic bags and plastic labo while leaving paper, etc. untaxed. RA 9003 requires a science-based comparison of plastic vs. other bags' LCA. Imported plastic bags should be double-taxed because they don't create jobs or promote social progress. Adding burdens to consumers and killing the plastic industry will be counterproductive to progress and affect the upstream naphtha cracker and petrochemical industries, which President Bongbong Marcos promotes for a progressive Philippines.