The Department of Finance (DoF) is hoping the excise tax on single-use plastic (SUP) bags could be increased to help secure substantial government funds while mitigating climate change.

DoF Chief Economist Domini Velasquez said finance officials are proposing to lawmakers to raise the excise tax on SUP bags between P100 and P300 per kilogram.

The DoF said the government can gain P31.5 billion in revenue from 2025 to 2028 with an SUP excise tax of P100 per kilogram.

"To be very conservative in terms of fiscal targets, I think we're keeping the assumption at P100. If we're able to negotiate with Congress to increase it, then that will happen and it will be positive for the government," Velasquez said.

If the proposal for an SUP excise tax of P100 per kilogram passes into law, the price of a handle-less plastic bag will slightly increase from P0.47 to P0.82. Meanwhile, the price of a plastic bag with handles will increase from P0.51 to P0.91.

Data from the World Bank shows the Philippines is the third largest contributor of mismanaged plastics in the ocean which receives up to 750,000 metric tons of such waste each year.

"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,” DoF Secretary Ralph Recto said.

The excise tax on SUP bags has been pending at the Senate since the House of Representatives approved the bill on its final reading in November 2022.

No hike for alcohol

Velasquez also said there is no DoF proposal to increase sin tax for alcoholic drinks. Instead, she said the DoF is looking into any tax leakage from these products.

"We're not keen on increasing any thing that will increase inflation but we're really zeroing in on how to improve administrative efficiency," Velasquez said.

She said the DoF, Bureau of Internal Revenue, and Bureau of Customs have started to digitalize process to accurately reflect data on taxes and trade so the government can collect due revenues.

When ensuring efficient revenue collection, Domini said indirect taxes on alcohol drinks are easier to assess.

"I think when Secretary Recto came in, he asked for a lot of that data to ensure where we'll look first," she said.

"The reason I said indirect tax is a low hanging fruit is because we can compare or assess using the volume of tax collection and the goods shipped to the Philippines," Velasquez added.