House bill to impose excise tax on SUPs passed on third reading

The House of Representatives of the Philippines approved on third reading a bill that seeks to impose excise tax on single-use plastic (SUP)s on Monday, November 14, 2022.

Under the approved version of House Bill (HB) 4102 or the Single-use Plastic Bags Tax Act, an excise tax of PHP100 will be imposed for every kilogram of SUPs removed from the place of production or released from custody of the Bureau of Customs (BOC).

“I thank the House under the leadership of Speaker Ferdinand Martin Romualdez for exercising swift and careful judgment on the approval of the single-use plastic bag tax act. This is our contribution to the global movement to reduce pollution, while raising revenues needed to manage economic risks and rehabilitate the country—like hitting two birds with one stone,” said Finance Secretary Benjamin Diokno.

The price of a pack of labo bags is estimated to increase by around 75.0 percent during the first year of implementation, with an estimated decline in volume by around 24.7 percent. While the retail price of sando bags will increase by 79.3 percent, which is expected to result in a 26.1-percent decline in volume.

The proposed excise tax will increase yearly by 4 percent beginning 2026, and incremental revenues collected will be allocated to the Department of Natural Resources (DENR)’s programs for the implementation of Republic Act (RA) 9003, otherwise known as the Ecological Solid Waste Management Act of 2000.

A 70 percent assumption in collection efficiency will translate to estimated revenues of PHP38.06 billion for five years (2023-2027) of implementation.

If passed into law, the bill will address the long-standing issue of plastic waste management by promoting the use of recyclable packaging, and ending the “throw-away culture”.

Studies have shown that market-based instruments, such as taxes aimed at discouraging the use of SUPs, have proven to be effective in curtailing plastic waste generation.

In the ASEAN region, Brunei and Vietnam have already imposed taxes on SUP bags. As a result, Vietnam saw a 23-percent reduction in daily plastic consumption—from 746 tonnes a day in 2014 to 577 tonnes in 2017.

Meanwhile, Washington, D.C., San Francisco, and Seattle significantly curbed plastic consumption by 85 percent, 72 percent, and 78 percent, respectively as a result of taxing SUPs.

According to the World Bank, the Philippines, China, Indonesia, Thailand, and Vietnam account for 55 to 60 percent of plastic wastes entering the oceans. SUPs were also found to be among the primary wastes collected during DENR coastal clean-up campaigns.

The bill was transmitted to the Senate on November 15, 2022.