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House measures taxing plastics, digital services pass on third reading

PRIORITY legislation taxing single-use plastics, foreign digital service providers, as well as a bill reforming the tax regime on passive income, were approved on third reading at the House of Representatives on Monday.

Voting 255-3, the House approved House Bill (HB) 4102, which seeks to impose an excise tax of P100 per kilogram on single-use plastic bags.

The bill calls for the tax to increase 4% every year starting Jan. 1, 2026. Incremental revenue from the tax will fund programs of the Department of Environment and Natural Resources.

Albay Rep. Jose Ma. Clemente S. Salceda said the measure is expected to raise P9.3 billion in revenue.

Party-list Reps. Arlene D. Brosas of Gabriela, France L. Castro of ACT-Teachers and Raoul Danniel A. Manuel of Kabataan voted against the measure, calling it a burden to consumers.

“While we want to regulate the use of plastic bags for environmental concerns such as reducing pollution, this proposed measure will just be an additional burden to consumers, sellers, and retailers,” Ms. Brosas said during plenary.

In a vote of 253-4 with one abstention, the House also approved HB 4122 on third reading. The measure seeks to impose the 12% value-added tax (VAT) on nonresident digital service providers such as Spotify and Netflix.

If signed into law, the 12% VAT will be imposed on the digital sale of services like online advertising, video on demand subscriptions, and the supply of other services which are delivered through online marketplaces, webcasts and mobile applications, among others. 

Mr. Salceda, who also chairs the House ways and means committee, said the measure is expected to generate P19 billion in revenue.

“While it is true that the playing field must be fair especially to local online digital service providers who are already imposing VAT on digital goods and services, we believe levying a new tax in the form of digital tax on other streaming services and digital transactions is not the way forward,” Ms. Brosas, who voted no, said.

The House, voting 258-3, also approved on final reading HB 4339 which seeks to simplify taxation of passive income by harmonizing most rates at 15%. 

Mr. Salceda said the measure is expected to generate P20 billion, mainly by raising the tax rate on foreign currency deposits to 20%.

The measure also proposes gross receipts tax on bank, quasi-bank and other nonbank financial intermediary income of 5%, a premium tax of 2% and a stock transaction tax of 0.1%. — Matthew Carl L. Montecillo