The Philippine Government Proposes Tax Adjustments in its ProGRESS Package
The Philippine government is set to implement a new tax package known as ProGRESS, aiming to provide financial relief by reducing personal income taxes. The personal-income-tax exemption threshold is set to increase to PHP 350,000. However, to balance the reduced income tax revenue, the government plans to raise the excise tax on sweetened beverages. The levy on these drinks will increase from PHP 6 to PHP 20 per liter for those containing sugar and other sweeteners, while beverages using high-fructose corn syrup will see a rise in tax from PHP 12 to PHP 40 per liter.
The Department of Finance (DOF) has outlined that these increases could lead to the government collecting more than three times the current excise tax on sweetened beverages. This would offset the projected revenue loss from the personal income tax cuts, estimated at approximately PHP 326.92 billion between 2027 and 2030. Conversely, the revenue-generating initiatives are expected to raise around PHP 518.71 billion in the same period.
Historical data from the Philippines' previous tax reform suggests potential impacts on prices and consumption patterns. When a similar sweetened-beverage tax was implemented in 2018 under the TRAIN law, the price of affected beverages increased shortly after, with a marked sales decline in local sari-sari stores. Companies have since adapted by reformulating products, altering packaging, or adjusting prices.
The upcoming measures may rekindle debates on the balance between personal income tax relief and potential increases in consumption costs. For example, a worker might see an income-tax reduction equivalent to PHP 1,250 per month, which could be partially offset by higher expenses due to increased drink costs.
The government projects that the excise taxes on sweetened beverages could bring in about PHP 296.97 billion between 2027 and 2030, nearly 99% of revenue matched to income-tax relief. This suggests a strategic financial move rather than pure relief.
With inflation affecting household budgets—recorded at 6.2% in July for sectors like housing and utilities—the timing and impact of these tax changes warrant careful consideration. The government intends for ProGRESS to effectively restructure the tax system, allowing taxpayers to retain more income while ensuring sufficient revenue for public services.
