DOF eyes excise taxes on ice cream, frozen yogurt, sweetened fruit juices
The Department of Finance has proposed to add excise taxes on ice cream and frozen yogurt as part of its bid to expand the coverage of sweetened beverage tax.
During the House Committee on Ways and Means hearing on Monday, Sept. 14, with the Department of Health, Finance Undersecretary Karlo Fermin Adriano said the DOF is "expanding the coverage [of sweetened beverage tax] to include edible ices. Ito po 'yung mga ice creams and popsicles."
Aside from dairy and plant-based ice creams and ice milk, the expanded excise tax coverage will also include water-based ices, such as sorbets and ice lollies, as well as flavored and unflavored frozen yogurts.
According to the Bureau of Internal Revenue, excise tax is a tax on either the production, sale, or consumption of specific commodities sold and services done in the Philippines. It is generally added on top of a product or service's 12% value-added tax. These taxes are mandated by the Tax Reform for Acceleration and Inclusion Law.
DOF is also proposing to lift the excise tax exemption on 100% natural fruit juices and 100% vegetable juices with no added sugar.
The department will retain the current sweetened beverage tax exemption on milk products, medically indicated beverages, ground, instant, and 3-in-1 coffee, unsweetened tea, and beverages sweetened with pure coconut sap or pure steviol glycosides.
Under the TRAIN Law, excise tax on caloric or non-caloric sweeteners, including sugar, is at P6 per liter and P12 per liter for high-fructose corn syrup or mixed with caloric or non-caloric sweeteners. DOF is proposing to increase the sweetener excise tax to P20 per liter and P40 per liter for products with high-fructose corn syrup.
The following products are covered by the sweetened beverage tax structure: sweetened juice drinks, carbonated drinks, flavored water, energy drinks, cereal drinks, powdered juice drinks, and sweetened non-alcoholic drinks.
From 2018 to 2025, SB excise tax contributed an annual average of P37.5 billion, equivalent to 0.17% of the country's GDP.
The DOF's bid to expand the coverage of SB excise tax is part of the department's ProGRESS bill proposal (Promoting Growth, Revenue, and Equity towards Socio-economic Sustainability). Its aim is to offset the anticipated revenue losses brought about by President Ferdinand Marcos Jr.'s tax relief promises made during his 2026 State of the Nation Address.
These promises include raising the personal income tax exemption from P250,000 to P350,000 and granting tax relief to micro and small enterprises.
There is a health aspect to the SB excise tax expansion, too. In his presentation, Adriano explained the correlation between the affordability of sweetened beverages and the incidence of obesity.
"The more affordable the SB [is], the higher the prevalence of obesity," said Adriano.
If the proposal pushes through, Adriano said DOF is projecting a 27.2% reduction in demand by 2027 for products covered by the SB tax.
There will be considerable impact on government revenue, as well. Should its proposal be approved, DOF estimates revenue of P63.26 billion in 2027, P70.52 billion in 2028, P78.39 billion in 2029, and P86.95 billion in 2030 for a total earning of P299.13 billion in four years.
