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Mondelēz execs propose ‘more equitable’ tax on sugar-sweetened beverages

The market leader in powdered beverages and snacks giant Mondelēz Philippines is proposing a more equitable tax base for the Department of Finance’s controversial sugar-sweetened beverage (SSB) tax, suggesting lawmakers and finance officials to base it on sugar content instead of a per-volume basis.

Mondelēz Philippines, maker of powdered-juice drink Tang, is airing reservations not just on the timing of the tax on SSBs, but on the structure of the proposal itself.

“We’re looking for a midpoint in the discussion. We want to be responsible taxpayers, but how do we do it? We feel the tax is premature in the sense that not enough discussion, and dialogue has happened to implement it in the timeline proposed. We feel it’s regressive, as well,” Mondelēz Philippines Country Manager Ashish Pisharodi told reporters at a news briefing on Thursday.

Underlining the price impact, Pisharodi said on  a consumer buying the 25-milligram sachet of Tang at P9 currently will be buying the same product at P30 if the SSB proposal is taken in its current form.

Shanahan Chua, Mondelez head for Corporate and Government Affairs, said a more equitable solution is changing the tax base from a per-volume basis.

“We have serious concerns on the bill that the Senate is reviewing right now on the structure and the rate proposed—the per-volume liter. We want the government to take a step back and continue the dialogue with us to have a fairer taxation system,” Chua added.

“What we are looking at as an industry is what Sen. Sonny Angara was saying in previous hearing—look at sugar content instead of literage because we are taxing the sweeteners in the product instead of the volume of the beverage. That has a disproportionate effect on the whole beverage category in the bill,” the company executive said.

To recall, the tax on SSB was inserted in the first package of the comprehensive tax reform program – essentially the the Tax Reform for Acceleration and Inclusion Act now being deliberated in the Senate.

The tax on SSBs is placed at P10 per liter of volume capacity for beverages sweetened with local sugar and P 20 for those using high-fructose corn syrup or imported sugar.

This is scheduled to increase at a rate of 4 percent every year starting from the year of predicted commencement in 2018.

Mondelez’s Tang juices fall under the definition of a sugar-sweetened beverage as it uses artificial or non-caloric sweeteners.

The company is estimated to take up half of the $250-million local beverage industry.

Mondelez’s portfolio spans five categories: powdered beverages, meals, biscuits, chocolates, and candies. It’s considered a market leader in beverages and in meals, specifically in cheese brands Eden and Cheez Whiz.

“We need to have further research on local sugar consumption in the Philippines before we have that taxation that will really impact D & E segment of consumers,” Chua said

 

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