The Department of Trade and Industry (DTI) is opposing a measure that seeks to impose a P10 excise tax per liter on sugar-sweetened beverages (SSBs), saying this would cut jobs and burden the poor.
In a position paper submitted to the House Committee on Ways and Means, the DTI said the P10 excise tax is “anti-poor.” The DTI noted that most SSBs are soft drinks, juice, and 3-in-1 coffee, which are cheap and are considered the main sources of energy of low-income Filipino households.
“The beverage industry, along with allied industries, will be negatively affected [by the tax]. This will also lead to lower demand and employment in the industry,” the paper, prepared by the DTI’s planning bureau, read.
“While the department has no mandate on taxation, it generally supports measures to improve tax collection and balanced taxation measures, provided that these will not impede the growth of the country’s industries,” it added.
The DTI also said obesity is not caused by sugar or by other sweetened beverages alone, saying the problem is really more about “improper nutrition.”
“We wish to suggest to the government to explore other strategies, including public-awareness campaigns and the promotion of healthy lifestyle, that could help curb obesity and also improve taxation,” it added.
The DTI said the proposed P10 excise tax and a 4-percent annual increase will affect the competitiveness of local beverage makers and other allied industries.
“At present, local sugar prices are already high as compared with other Asean countries. In 2015 our wholesale price of refined sugar is calculated at $1.05 per kilogram, compared with the wholesale price in Thailand at $0.59 per kg and Indonesia at only $0.91 per kg,” the paper read.
“This puts pressure on the pricing of locally manufactured beverages to compete with imports that are cheaper and shipment of these beverages come in at mostly zero tariffs,” it added.
The decline in the sales of SSBs, the DTI said, would also affect sugarcane farmers, millers and small business owners. The agency noted that House Bill (HB) 292 not only covers artificial sweeteners, which are normally imported, but also locally produced sugar.
“The resulting loss in sales would affect a lot of stakeholders, both in the upstream and downstream value chain of the SSBs from the sugarcane farmers, to the sugar millers and traders to the truckers, and logistics and storage providers, wholesale marketers and retailers,” it added.
The DTI said HB 292 can also affect the coffee industry. “SSBs include instant coffee and this may affect the coffee industry comprising of 120,000 hectares of coffee plantation around the country, supporting 60,000 to 80,000 farmers.”
The agency noted the top coffee regions—Soccsksargen, Davao and the Autonomous Region in Muslim Mindanao—account for 64 percent of the national coffee production.
HB 292, authored by Partido Demokratiko Pilipino-Laban Reps. Horacio Suansing Jr. of Sultan Kudarat and Estrellita Suansing of Nueva Ecija, seeks to impose an excise tax of P10 on SSB per liter of volume capacity to generate additional revenues for the government and “promote public health and wellness.”
The measure, which is currently pending before the ways and means panel, will insert Section 150-A in the National Internal Revenue Code of 1997, as amended.
The bill defines sugar-sweetened beverage as “a nonalcoholic beverage that contains caloric sweeteners/added sugar or artificial/noncaloric sweetener. It may be in liquid or solid mixture, syrup or concentrates that are added to water or other liquids to make a drink.”
The authors of the bill said President Duterte, Health Secretary Dr. Paulyn Jean B. Rosell-Ubial and groups, like the Philippine Heart Association (PHA), have already expressed support for “sin” taxes on sugary drinks.
They said sweetened drinks and junk food are among the main culprits in the increasing cases of obesity, diabetes, heart disease, high-blood pressure, stroke and gall stones.
“Studies have shown that consumption of sugar-sweetened beverages increases the risk of developing health problems, such as blood- sugar disorders, obesity, diabetes and other related diseases, like bone fractures, hyperacidity, tooth decay and heart problems,” they said.
Citing data from the Department of Health (DOH), the lawmakers said the government has spent P50 billion for diabetes-related diseases from 2009 and 2012, based on PhilHealth claims.
For diabetes alone, they said the government spends about P5 billion annually.