Conclusion
AS some government officials seek to find the right track for the Tax Reform for Acceleration and Inclusion (Train) bill, some are uncertain with the course it is undertaking.
While government officials boast the Train bill would deter deterimental effects on Filipinos’ health, some say the proposed tax-reform law runs the other way.
So Victoria Aguinaldo thinks.
“They are saying Filipinos are getting obese because of soft drinks and 3-in-1 [instant beverage], but is it really the reason? It seems that it has not been studied well,” Aguinaldo, president of the Philippine Association of Stores and Carinderia Owners, told the BusinessMirror.
Alternative
AGUINALDO argues that consumers choose powdered juices because these are cheaper alternatives to real fruits and healthy commodities.
“That’s what the ordinary Filipino can buy; it’s a healthier alternative for them to consume. What can they buy with P10 or P20 that is nutritious?” she said.
“One kilogram of banana is P60, while one piece of apple is P20. Meanwhile, powdered juices are priced way below and, in just a liter of water, a lot of people could drink,” she added. “If these commodities are unhealthy to Filipinos, then the government should not have allowed the manufacturing of these products.”
Once the proposed additional tax is applied, a 3-in-1 coffee sachet, currently priced at P5, will be P8; a 1-liter bottle of juice concentrate, currently priced at P9, will have a retail price of P30; a 1-liter bottle of tea, currently priced at P20, will be sold at P30; and carbonated drinks and tetra pack of ready-to-drink juice, currently being sold for P15 per liter, will cost P25.
The products covered by the Train proposal, or House Bill (HB) 5636, will include all sweetened juice drinks, sweetened tea, sweetened coffee, all carbonated beverages with sugar, including those with caloric and noncaloric sweeteners, flavored water, energy drinks, sports drinks, powdered drinks not classified as milk, juice, tea and coffee, cereal and grain beverages and even nonalcoholic beverages with sugar.
Sleight of hand
FOR Louie C. Montemar, coconvener of consumer group Bantay Konsyumer, Kuryente, Kalsada (translated as guarding consumer, electricity and roads, or BK3), disguising the proposed tax reform as a “health” measure is “fooling” the Filipino people. “There is a slight of hand happening here. They are packaging it as a health measure, and I think that’s fooling the people,” Montemar told the BusinessMirror.
Montemar, a political-science professor, said officials cannot pinpoint sugar as the lone culprit on the reported rise of diabetes in the country.
“There are a lot of factors that contribute to diabetes, particularly food consumption, and sugar is just contributory. You say this is a health package because of the rising case of diabetes,” he said. “Then that means the cause of this rising case is the food items they consume, and I don’t think they are showing it. The study they are showing that diabetes is on the rise but [they are] not [showing] the real reasons.”
The BK3 official said they should come up with a study that shows that the poor people, who are expected to be burdened by the proposed tax measures, are also the ones with increasing rate of diabetes.
“There are really other factors to consider, one is genetics. And if you consume a lot of sugar and you use it in form of energy for activities then there’s no problem,” Montemar said. “How about those people living a sedentary lifestyle? They are more at risk for diabetes than our laborers and workers who are sweating daily.”
He also questioned why are the commodities, which also contain sugar, that are commonly bought by the middle to upper-middle class are excluded from the proposed tax measure.
“Why is it like that? The poor are not buying Starbucks. They cannot even buy cakes regularly,” he said. “This is anti-poor. It is very clear [HB 5636] is anti-poor.”
Discriminatory
THE Beverage Industry Association of the Philippines (BIAP) shares the same sentiment as
Aguinaldo’s and Montemar’s.
“The proposed tax is discriminatory. It applies to a single category, manufactured and prepackaged beverages, when, in fact, there are other categories that contribute to obesity and diabetes,” BIAP said in its official position paper regarding HB 5636. “SSBs account for just 2.1 percent of daily food intake in the Philippines.”
The BIAP pointed out that the incidence of obesity and overweight in the country is prevalent in the higher-income classes, rather than in the lower socioeconomic segment.
“Eighty percent of beverages is consumed by the lower-income classes—those who are the least affected by obesity and diabetes,” it said. “The promotion of an active lifestyle is a more effective measure in curbing obesity and diabetes than taxing a particular food or beverage.”
Tier system
THE BIAP recommends the government adopt a tax and health measure based on the caloric sweetener content of products.
“In consideration of the Asian flavor profile of consumers, the Senate may explore adopting the Singapore threshold system combined with the United Kingdom’s tiered system as a basis for imposing a tax rate as declared in the nutrition information panel,” the BIAP said in a statement.
The BIAP said products falling under the first tier—zero grams to 7 grams per 100 milliliter (ml)—would be applied a zero rate, while the second tier—7.1 grams to 10 grams per 100 ml—would be applied P8 per kilo of caloric sweetener. Products falling under the third tier, those above 10 grams per 100 ml, would be slapped with P10 per kilo of caloric sweetener.
Under such tax system, the industry will be encouraged to introduce new products promoting proper sugar intake and invest more resources to provide Filipino consumers a wider range of low- and no-calorie beverages, according to BIAP.
“This system, while encouraging product expansion, will also balance the need to maintain Filipino flavor preferences, and subsequently, support local industries,” the group said.
Per kilogram
ANOTHER option would be imposing an excise tax of P10 per kilogram on caloric sweeteners.
“To illustrate, under a P10-per-kilogram tax on caloric sweeteners, the price increase on the products will range up to 12 percent, which may burden the consumers less; as opposed to a 40-percent to 200-percent increase under HB 5636,” BIAP said. “By taxing caloric sweeteners, the beverage industry will continue investment and innovate products. Further, since companies’ product information on content and ingredient data are already submitted to FDA, making administration feasible.”
Last, BIAP suggested the government explore implementing a P5-per-kilogram tax on all caloric sweeteners used as a raw material. Under such tax measure, the government’s administration would be easier as they only need to monitor refined sugar and high-fructose corn syrup, as well as imported raw materials and finished products that use caloric sweeteners.
“Compared to HB 5636, the P5-per-kilogram tax on all caloric sweeteners used as a raw material will affect all users of caloric sweeteners, thus, broadening the tax base beyond just the beverage industry,” it said.
“The impact on retail price will be less than 5 percent, therefore, making it less disruptive to investments and employment in the beverage, sugarcane, coffee and their support industries. More important, from a health perspective, this broad-based measure avoids being discriminatory by capturing all products that contain caloric sweeteners,” it added.
Image credits: Nonie Reyes
1 comment
Tingin ng mga bright boys ni Dominguez tanga ang mga pinoy kaya binebenta ang tax reform nila na kontra-sakit daw. Palibhasa malayong mas madami ang mahihirap sa pilipinas na tumatangkilik sa mga produktong gusto nilang taasan ang buwis.
Wag na paikot-ikot pa, baka sakaling mas katanggap-tanggap sa pinoy na matagal nang pinagloloko ng mga negosyanteng opisyales ng gobyernong ito.