BIR expects single-use plastics tax to raise revenue of up to P10B per year

THE GOVERNMENT expects up to P10 billion in revenue yearly from the proposal to impose an excise tax on single-use plastics, the Bureau of Internal Revenue (BIR) said.

Commissioner Charlito Martin R. Mendoza told BusinessWorld last week that the proposed tax measure is projected to generate between P6 billion and P10 billion annually, “depending on the rate and coverage.”

The plastic tax measure is among the priority bills of the Marcos administration listed in the Common Legislative Agenda of the 20^th Congress.

The House of Representatives has nine pending bills proposing an excise tax on single‑use plastics, while the Senate has four.

Finance Undersecretary Karlo Fermin S. Adriano has said that the proposal is primarily not a tax bill but an environmental measure to curb the use of plastics.

Mr. Adriano said at a P100-per-kilogram excise tax, the resulting revenue will be P8 billion. He added that plastic pollution costs the government about P70 billion per year, he added.

Analysts said the proposed excise tax on single-use plastics risks inflationary pressures and job losses.

Foundation for Economic Freedom President Calixto V. Chikiamco said the measure carries both drawbacks and advantages.

“Another pro may be to raise revenue while benefiting the environment. Cons may include raising prices (i.e., inflation) if there are no better alternative to the use of plastics on many goods,” Mr. Chikiamco told BusinessWorld on Monday.

He cautioned that the tax could weigh on the plastics industry, creating more unemployment at a time when manufacturing growth remains “anemic.”

S&P Global earlier reported that the Philippine Manufacturing Purchasing Managers’ Index slumped to 47.4 in November, the steepest drop in over four years — as output and new orders declined amid weather disruptions.

John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said the measure could provide the government with “a modest but meaningful revenue boost,” especially as slower economic growth and a corruption scandal have dampened collections.

The BIR is expected to miss its P3.22-trillion full-year collection target due to lower remittances from the Department of Public Works and Highways  due to the corruption investigations into infrastructure projects, as well as slower economic growth overall.

“While P10 billion would not radically change fiscal space, it helps plug gaps without relying on more distortionary taxes,” Mr. Rivera said via Viber.

He also noted that excise taxes are designed to influence behavior, not just raise money.

“Passing the cost to consumers can reduce plastic use over time, but the effect will depend on the availability of affordable alternatives and strong enforcement,” he said.

In the near term, Mr. Rivera said households may perceive the tax as an added burden, but could help shift consumption patterns — provided greener substitutes are accessible and businesses comply.

Meanwhile, IBON Foundation Executive Director Jose Enrique A. Africa said the proposed tax would disproportionately burden poor and middle-class consumers, who already face levies on fuel, sugary drinks, and value-added tax.

“The measure is packaged as an ecological tool but is really just another consumption tax imposed on ordinary Filipinos to keep relieving the rich and large corporations,” he told BusinessWorld via Viber.

“For years now, the fiscal path has been towards more regressive consumption-based taxes while cutting direct taxes on income, wealth and corporate profits,” he added.

Mr. Africa said raising consumer prices in a market where large corporations rely heavily on plastic-intensive packaging will not meaningfully reduce plastic use.

The government should push manufacturers toward recyclable materials, enforce producer responsibility, or invest in solid waste systems, rather than justify another regressive tax, he said.

BIR collections rose 7.45% to P3.47 trillion at the end of October, accounting for 82.35% of the agency’s P3.22-trillion full-year target. — Aubrey Rose A. Inosante