Mondelez calls P10/liter sugar tax ‘unfair’

SNACK COMPANY Mondelez has expressed “serious concerns” about the government’s proposed P10 per liter tax on sugar-sweetened beverages, calling the proposal premature and unfair.

“As Mondelez, and as an industry, we have serious concerns about the bill that the Senate is reviewing right now and we have real concerns about how that is structured on its taxation rate proposal, which is per volume liter,” said Shanahan Chua, head for corporate affairs and government affairs for the Philippines, Indonesia, Taiwan, Hong Kong and Singapore.

Mr. Chua was referring to the tax reform measure recently passed by the House of Representatives, which includes a provision that imposes a P10 excise tax on every liter of sugar-sweetened beverages containing locally made sugar, while others will be taxed P20 a liter.

 He made the statement when asked about the company’s stand on the tax proposal during the launch of a new product, Oreo Thins.

“As a member of BIAP (Beverage Industry Association of the Philippines), what we want is to urge the government to take a step back and have a dialogue and continue the dialogue with us to look at this, and to really take more time to have a fairer taxation system,” he added.

The group has a number of beverage lines like Tang but also owns brands like Cadbury’s, Nabisco and Toblerone

Senator Juan Edgardo M. Angara is looking into imposing excise tax depending on the sugar content of the beverage, instead of taxing at P10 per liter. He said a P10-excise tax might be too high, as this would raise the prices of some drinks by 50%.

“What we are looking at as an industry is to echo what Sen. Angara was saying,” Mr. Chua said.

Aishish N. Pisharodi, Mondelez country head for the Philippines, said the company is not against taxation but what it is against is the way the bill is currently drafted.

“There are ways to achieve objectives and still pay tax and that’s what we are discussing right now — how to make it constructive, how to make it sustainable and at the same time contribute to the goals of the government,” he said.

He said the company and the industry want to hold more “constructive talks” with the government because they feel that imposing the tax is premature.

“Not enough discussion and dialogue have happened to be able to implement the tax within the timeline that is currently proposed,” he said.

With the proposed measure a sachet of Tang at P9 would rise to P20, which makes budgeting a “nightmare” for homemakers who “may not even have any benefit from the changes from the tax reform package.”

He said the company is willing to pay its fair share of tax, but the proponents of the measure should also look into the problem they are trying to solve and the ill-effects they were trying to mitigate to make the measure sustainable.

“We want to continue to invest here, and it’s good for our consumers, so it’s good for the government and the people. And therefore our position is the current implementation timeline is very premature. There’s a lot of work that needs to be done,” he said.

He said the way the tax measure is structured “is not fair, it’s regressive and it’s unimplementable. There are ways to achieve objectives and still pay tax and that’s what we are discussing right now — how to make it constructive, how to make it sustainable and at the same time contribute to the goals of the government,” he said.

 Mondelez, which has been in the country for 54 years, enjoys market leadership in products such as powdered beverages and cheese.

Its parent, Mondelez International, Inc., is listed on the Nasdaq.

In the Philippines, Mondelez has a manufacturing facility in Parañaque City and employs about 400 people. — Victor V. Saulon