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For some, ‘sweet tax’ leaves sour aftertaste

The Duterte administration has been pushing for the passage of its comprehensive tax reform package (CTRP) aimed at raising more revenues for its various infrastructure and social-development programs. But the CTRP also includes a provision raising taxes on sugar-sweetened beverages (SSBs), including soft drinks and powdered juices, that’s generating concern, not only from a broad range of people—sugarcane farmers, employees of food and beverage manufacturers, owners of sari-sari stores and small eateries and ordinary consumers—who all consider it insensitive, as it would hurt them the most. All in all, if passed, the bill would adversely affect an estimated more than 1 million Filipinos nationwide.

Sen. Juan Edgardo M. Angara, chairman of the Senate Ways and Means Committee deliberating on the measure, has indicated he is considering “a fairer and more reasonable” excise tax on SSBs. He suggests imposing an excise tax depending on the drink’s sugar content. The P10 per liter of SSBs, he said, is too high, and would surely jack up prices by as much as 50 percent.

For his part, Sen. Joseph Victor G. Ejercito has come up with an alternative proposal. One, a tax of P0.03 per gram of sugar on sweetened beverages using purely caloric sweeteners and exemption for beverages that use purely coconut-sap sugar. Two, a tax P0.05 per gram of sugar on sweetened beverages using purely high-fructose corn syrup, or in combination with any caloric or noncaloric sweetener. And three, a tax of P0.01 per gram of sugar on sweetened beverages using purely noncaloric sweeteners, or a mix of caloric and noncaloric sweeteners, and exemption for beverages using purely steviol glycosides.

Critics of the OTRP, which would reduce the income tax of low-wage earners, argue that the benefits from lower income taxes would be totally offset by the drastic increase in prices of SSBs, effectively setting back the goal of progressive taxation.

The tax bill had also been touted for its supposed health benefit, as it would reduce diabetes and obesity incidence among Filipinos. But this argument has been downplayed by government economists, who now cite the need to raise an estimated P40 billion to P47 billion in additional revenues for the administration’s “Build, Build, Build” infrastructure program,

Imposing new taxes at this time seems to be out of turn when the government should focus instead on eliminating unabated smuggling. A recent study by the University of Asia and the Pacific showed that illicit trade in only eight industries led to the smuggling of some P904.6 billion worth of goods into the country in a span of five years. It is believed that if the figures from outside the frequently smuggled products, such as petroleum, cigarettes and sugar were included, we can easily conclude that more than a P1 trillion worth of goods pass through Customs without paying the proper tax.

Smuggling is estimated to cost the country’s GDP in the same period no less than P495.5 billion. This does not include the more-than P1-trillion loss in domestic production or gross output and nearly 300,000 displaced workers. This is more than tenfold what the national treasury stands to gain from proposed taxes seen likely to harm rather than benefit ordinary consumers.

The Philippine Association of Stores and Carinderia Owners (Pasco) has initiated a signature campaign to register their opposition to the proposed bill. They have already gathered more than 300,000 signatures for the petition calling on government to scrap the so-called sweet tax. The petitioners, consisting of owners and customers of small sari-sari stores and carinderias from all over the country, expressed vehement objection to the approval of a bill that they said would drastically affect their daily income.

In an open letter, Pasco said it supports the Duterte administration’s poverty-alleviation program, but the sweet tax was unacceptable. “We understand and support our government’s need to raise money for its various social and infrastructure programs to help improve the lives of the Filipino people and sustain the country’s economic growth, but this bill is anti-poor and will make small microretailers, consumers, sugar and coffee farmers, and manufacturing-plant workers carry the burden,” they said.

The group reminded government that 80 percent of the consumers of SSBs are low-income earners, who also spend as much as 40 percent of their income on these drinks. The signature campaign is still ongoing, with the organizers hoping to gain more support from ordinary consumers.

 

E-mail: ernhil@ yahoo.com.

 

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