Food industry says sugar tax on beverages hits poor hardest

Posted on June 01, 2017

THE government’s proposal to impose an excise tax of P10 per liter on sugar-sweetened beverages (SSB) will disproportionately impact the poor, who are among the top consumers of certain classes of sweetened drinks, food manufacturers said.

The proposed P10 excise tax on sweetened drinks aims to curb consumption of sweetened beverages on health grounds as well as to offset revenue to be forgone from a rebalancing of the country’s tax regime.
In a statement on Wednesday, the Philippine Chamber of Food Manufacturers, Inc. said the measure on the upward tax adjustment, covered in House Bill 292, is “disproportionately high compared to those in other countries with similar taxes.”

Citing a 2016 study of the University of Asia and the Pacific, “An Economic Impact Study of the SSB Bill on the Beverage Industry in the Philippines,” the group also said that the bill, if passed into law, will also “hurt sugar and coffee farmers, and sari-sari store owners.”

Last month, the proposed tax was included in the government’s tax reform package, the first tranche of the government’s comprehensive tax reform program.

The group said that the Department of Finance drafted the sugar tax measure from the Mexican model which was considered a model for sugar taxation, but added that the price impact exceeds Mexico’s.

“The Mexican tax model only impacts on prices of SSBs by a maximum of 10%,” the group added.

In Philippine peso terms, the Mexican tax is equivalent to P2.50 per liter, far exceeding the P10 level proposed by the government.

“The proposed model follows a one-size-fits-all mindset without due consideration for the common Filipino’s household budget for daily diet,” including those foods that are resorted to by poor people to ward off hunger, the Chamber added.

The Chamber cited research by AC Nielsen in 2016 noting that poorer segments are heavy consumers of coffee mixes, powdered concentrates and soft drinks.

“The very bottom of the income pyramid will end up paying more new taxes and will not even benefit from the personal income tax reduction of TRAIN (Reform for Acceleration and Inclusion Act),” the Chamber added.

The Philippine Chamber of Food Manufacturers has an estimated work force of 700,000 employees. -- Janina C. Lim