The government could consider imposing a differential-subsidization scheme as a tax measure on sugar-sweetened beverages (SSBs) to reduce the risks of Filipinos’ becoming diabetic, according to renowned endocrinologist.
Dr. Robert Lustig, pediatrics professor at University of California San Francisco (UCSF), said the government could explore putting a higher levy on SSBs, with the collection from the sales of sugary drinks to be channeled to subsidies for drinking water. In this tax scheme, Lustig said, the government places a “win-win” situation for both Filipinos and the beverage makers.
“Therefore, people will be able to pay less for water and move toward water, which is good for them as opposed to sugar-based soda, which is bad for them. People will nudge toward water and away from soda because it is expensive,” Lustig told the BusinessMirror on the sidelines of a news conference recently in Makati City.
“The beverage makers wouldn’t care because they are the one also making the water. So, they will sell more water and the grocery stores will still make money. Because what do they care? Sales.” Lustig added.
Lustig, who is also an affiliate faculty of UCSF’s Institute for Health Policy Studies, said differential subsidization is a policy that they recommend to countries and governments that are in the midst of imposing tax measures on sugar-based products and other health-risking commodities.
“I think it would be a good idea, so that would be my suggestion,” he said. “I think it could [work] for [the Philippines] if the government supports it. I think it is very doable.”
Lustig said Nordic countries, including Sweden, Denmark and Norway, have imposed a differential-subsidization scheme to curb the increasing number of alcoholics in their respective countries.
The three countries collectively adopted two pieces of legislation: first, nationalizing the liquor stores resulting in same products sold at the same amount; second, taxing high-alcohol spirits and subsidizing low-alcohol beer with the income from high-alcohol spirits, according to Lustig.
“What they were able to do was to nudge the public away from the hard spirits toward the low-alcohol beer, thus, reducing alcohol consumption. They were able to get people to reduce their alcohol consumption, hospitalization went down, car accidents went down, cirrhosis of the liver went down and economic productivity went up,” he said. “And those policies are still in placed today.”
Under the proposed comprehensive tax-reform package of the Department of Finance, SSBs—including soft drinks, soda, flavored-carbonated or noncarbonated beverages, fruit drinks, sports drinks, sweetened tea, coffee drinks and energy drinks, among others—would be taxed P10 per liter.
According to Finance Undersecretary Karl Kendrick T. Chua, a tax on SSBs at P10 per liter is a health measure helping more Filipinos to switch to eating healthier products and for the manufacturers to create healthier food and beverage alternatives.
“Because this is a health measure, the objective really is to reduce consumption. Studies have shown that a 20-percent increase in price is sufficient or necessary to reduce significantly that consumption,” Chua said.
However, the Beverage Industry Association of the Philippines said the proposed taxes would only serve to unduly burden “those who can least afford such an increase, while achieving nothing of real significance to address the health angle it purports to target”.
Lustig said measures, such as taxation, dietary guidelines and blue laws are imposed to curb the ill effects caused by substances—parituclarly hedonic ones, including cocaine, alcohol and even sugar—to the society. Lustig added that among these measures, taxation is the easiest one to impose because it doesn’t cost much, but, at the same time, it is usually opposed by consumers, saying that it is “regressive” in nature.
“People don’t want to usurp the power of the market, but in case of hedonic substance, you have to. There’s taxes in tobacco, in alcohol, in all sorts that are bad for society‚ sin taxes if you will,” he said.
“Sugar makes the same criteria, therefore, we need to think about what makes the most sense. People say taxes are regressive against the poor, but diabetes is more regressive against the poor—the cost of taking care of diabetes [patients] far outstrips the cost of taxes,” he added.
Lustig said the imposition of taxes on SSBs is now a global legislative debate, as countries like United Kingdom, Australia, Saudi Arabia, South Africa are mulling over such schemes. Lustig said the Philippines is consuming approximately 70 grams to 75 grams of sugar per day, which is almost triple the 25 grams to 37.5 grams per day recommended consumption by the World Health Organization.
“Here in the Philippines, you are just behind us in terms of prevalence of diabetes. You now have 7.2-percent diabetes rate and 30-percent obesity rate in adults,” he said.
“You are a developing country, we are a developed country. We cannot afford our health-care crisis, which means you as developing country, cannot really afford this health-care crisis which is about to engulf you,” he added.
Citing data from the Eighth Philippine Natural Nutrition Survey (PNNS), Health Delivery System Inc. Medical Director Robert Castro said the country’s diabetes prevalence was pegged at 7 percent in 2013. Castro added that 3 of 10 Filipinos are overweight, based on the PNNS. “The prevalence of malnourished adults with age more than 20 years old since 1993 to 2013 has rapidly increased, from 16.6 percent in 1993 to 31.1 percent in 2013,” Castro said. Lustig visited the country to meet with some 700 Filipino medical practitioners, with whom he shared findings on several studies on fats, sugars and metabolic syndrome, organized by the Philippine Society of Endocrinology and Metabolism and the United Laboratories Inc.