DOF Introduces Excise Tax on Single-Use Plastics to Combat Climate Change
The Department of Finance (DOF) of the Philippines has taken a bold step in the fight against climate change by proposing an excise tax on single-use plastic bags (SUPs). During a briefing held on March 6, 2024, the DOF unveiled this initiative as part of a series of stakeholder briefings aimed at fostering inclusive participation in the development of priority tax reforms.
The proposed measure targets the reduction of the high volume of mismanaged plastics in the country. It involves imposing an excise tax of PHP 100 per kilogram on SUPs that are not recyclable and fall outside the scope of the Extended Producer Responsibility (EPR) Act. To ensure the tax’s effectiveness keeps pace with economic changes, the DOF has included a 4% annual indexation starting from the third year of the tax’s implementation.
This initiative is not just environmentally strategic but also fiscally promising, as it is projected to generate PHP 31.52 billion in revenue from 2025 to 2028. The briefing saw participation from a diverse group of stakeholders, including representatives from the Philippine Alliance for Recycling and Materials Sustainability (PARMS), Philippine Business for Social Progress (PBSP), The Climate Reality Project Philippines, Ecowaste Coalition, Mother Earth Foundation PH, Philippine Business for Environmental Stewardship, Union of Local Authorities of the Philippines (ULAP), Department of Environment and Natural Resources (DENR), and the Philippine Plastics Industry Association (PPIA).
The DOF’s proposal is a testament to the government’s commitment to finding balanced solutions that address environmental concerns while also contributing to the nation’s development through innovative fiscal policies. If implemented, this excise tax on SUPs could set a precedent for other nations grappling with the dual challenges of environmental sustainability and economic growth.