I read with interest this paper’s report on the call of the Beverage Industry Association of the Philippines (BIAP) for Congress to lower the proposed tax on sugar sweetened beverages (SSB). BIAP understandably opposes Congress’s proposed P10 per liter tax on drinks with sugar, and P20 tax on beverages sweetened with alternatives like High Fructose Corn Syrup (HFCS).
BIAP instead proposes three options: the SSB tax must be based only on “caloric” sweetener content or the amount of sugar in beverages; or, the SSB tax can be limited to P10 per kilogram on all “caloric” sweeteners used in beverages; or, the SSB tax can be P5 per kilogram on all “caloric” sweeteners used as raw material in drinks, whether or not manufactured.
BIAP reckons that under its three proposed options, the SSB tax will not greatly increase the prices of items like soft drinks, 3-in-1 coffee, sweetened milk products, and other sweet beverages. On the other hand, Congress’s proposed tax rates of P10 and P20, based on volume, can make these products significantly more expensive.
Incidentally, I am opposed to Congress’s plan to tax sweet drinks, since I believe food and drinks should remain affordable and thus free from any excise tax. Moreover, I doubt that any tax on sugared or sweetened beverages will actually curb consumption, and meet its supposed twin objective of bringing down the number of cases of diabetes and obesity.
What I find interesting with the BIAP recommendations is that it seemingly excludes all “non-caloric” sweeteners and point only to “caloric” sweeteners like sugar. It appears that BIAP wants Congress to tax only sweeteners that provide calories, seemingly to the exclusion of artificial or zero-calorie sweeteners.
After all, if the SSB tax’s objective is to fight diabetes and obesity, then artificial sweeteners that do not provide the body any calories need not be taxed, right? BIAP, it seems, is promoting the concept of taxing the calories. The logic is that more sugar content means more calories, and thus greater risk of obesity and diabetes. And thus, the higher the tax. Logical?
My concern is that caloric sweeteners also mean “nutritive” sweeteners, or those that add to nutrition, considering that the human body also need sugars, which provide energy in the form of carbohydrates. On the other hand, non-caloric sweeteners are also “non-nutritive,” and it seems that BIAP wants the government to favor sweeteners that lack any nutritional value.
While I can accept the BIAP logic of taxing the calories, I am concerned that structuring the SSB tax this way can lead to a production shift to beverages with more non-caloric sweeteners, which are usually artificial. Examples of these sweeteners include Cyclamate, also known as Sucaryl; Saccharin, also known as Sweet N Low or E954; Acesulfame-Potassium, also known as Acesulfame-K, Ace-K, E950, Sunett, or Sweet-One; Aspartame, also known as Nutrasweet, Equal, or E951; Neotame; Sucralose; Stevia; and Monkfruit Sweetener.
Using the BIAP proposal, to avoid the SSB tax, and keep their products affordable, drinks manufacturers may be avoiding the use of sugar, whether locally produced or imported; and other “caloric” sweeteners like honey, sucrose, fructose (from fruits), and High Fructose Corn Syrup (which is derived from further processing corn starch into a sweeteners).
The BIAP proposal appears to sacrifice nutrition by favoring non-caloric or non-nutritive sweeteners. Moreover, while the plan may help contain obesity and diabetes, it may also lead to other health problems related to the extensive use of artificial sweeteners. They are plenty of studies and research findings on the harmful effects of both caloric and non-caloric sweeteners.
I don’t like the idea of taxing food and drinks. Except for tobacco or cigarettes, and alcohol or liquor, food and drinks and other consumables should be free from excise tax. And the same should go for sugars, natural or artificial; salts, and other ingredients in the production of food and drinks. The last thing the government should want is to make food and drinks less affordable for most people.
Also, why should the government favor artificial food over natural food, and impose this on people through tax? Even assuming both have harmful effects, wouldn’t we rather consume natural ingredients? And why tax sugar and other caloric sweeteners produced locally, and further marginalize our farmers, while exempting from tax non-caloric or artificial sweeteners produced abroad?
Moreover, do present levels of diabetes and obesity in the Philippines justify the imposition of an SSB tax? Can all diabetes and obesity cases be directly linked to the consumption of sweetened beverages? Are there more cases now related to what people drink rather than what they eat? Why is the tax targeting only sweetened drinks? Or, as BIAP wants it, only those drinks with nutritive sweeteners?
According to the Food and Nutrition Research Institute, local sugar consumption of 2% is actually below the recommended daily intake of 10%; per-capita sugar consumption reportedly peaked in 1996 and has been going down since then, stabilizing in 2010 at 1988 levels; and, Philippine sugar consumption at 22 grams per day is way below the US’ 126 grams, Japan’s 56 grams, and Brazil’s 47 grams. And China, despite a per capita consumption of only 15 grams, has a very high child obesity rate.
Frankly, I had expected BIAP to oppose the proposed SSB tax in whatever form or manner, given its potential adverse impact on industry sales. Consumers are up in arms against it, and rightly so. And senators, perhaps fearing the worst in the 2019 elections, have been weighing options carefully with respect to imposing new taxes.
I didn’t foresee BIAP suggesting, even remotely, to tax only drinks with caloric or nutritive sweeteners. I am uncertain as to what drives this consideration. Perhaps, by using non-caloric sweeteners, and keeping them tax free, BIAP members have better changes of retaining their present market share? Or, maybe, using non-nutritive sweeteners will keep production costs low?
The Senate, as it deliberates the tax proposals approved by the House, including the SSB tax, should get more help from health experts on this. Lawmakers should exert the effort to make a more informed decision particularly on the SSB tax. People need nutritious but affordable food and drinks.
Marvin A. Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippines Press Council.
