Beverage industry rejects proposed 10% tax on sweetened drinks

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THE Beverage Industry Association of the Philippines (BIAP) has objected to the proposed bill imposing a 10-percent tax per liter of sugar-sweetened beverages (SSBs), saying implementing the legislation if passed would actually run counter to its declared goals.

In a statement on Friday, BIAP said House Bill (HB) 292 will not achieve its targets of curbing obesity and increasing government revenue collection, but will instead raise the prices of several consumer goods and hinder economic growth.

This as the House Ways and Means committee said it wants to adopt HB 292 as part of the tax reform plan.

BIAP said that research findings show that compared to consumers in other countries, Filipinos are not over-consuming SSBs. “This is due to the smaller package size and less frequent consumption by Filipinos,” it said.


BIAP referred to World Health Organization (WHO) statistics released in 2015 showing that out of 192 countries in the world obesity index, the Philippines only ranked 155th. “Furthermore, it is not in the higher tier of the Asian countries.

The association also said that obesity Is caused by many other things aside from consuming too much sugar. It pointed to the Philippine Food and Nutrition Research Institute’s 2013 National Nutrition Survey which showed that “declining sugar consumption amid the rise in overweight/obesity and diabetes prevalence shows that some other types of food are causing the spike in these diseases.”

The proposed tax is also expected to raise the prices of consumer goods and to ultimately “have the most impact on the poor and poorest segments,” BIAP said.

As an example, it cited that instant coffee would see a price increase of 48.41 percent after an excise tax of P10 per liter is imposed, raising the price of a sachet of coffee from today’s P5 to P8. Powdered concentrate will go up in price by 108.61 percent, or from P9 per sachet to P19, while prices of tea drinks will jump 52.48 percent, going from the current P20 to P30 per bottle.

On the impact of the tax proposal on the national economy, BIAP said that aside from hurting the beverage industry, “the proposed tax will result in reduced government revenues, economic contraction and job losses.”

Drawing on 2016 statistics from the University of Asia and the Pacific Economic Impact Study (2016) and AC Nielsen Data, it said the proposed tax would affect the income of sari-sari stores, which make up 91 percent of retail stores in the country, as 31 percent of sari-sari store sales come from carbonated beverages.

BIAP also indicated a possible decline of about P20 billion in sales of SSBs and a P51-billion drop in the revenue of related industries. As a result, 39,000 direct and indirect jobs might be affected, and a 1.5-percent increase in unemployment is anticipated.

Meanwhile, there is a foreseen loss of P30-billion in government revenue from VAT and corporate income tax as well as a total loss to the Philippine economy of P63 billion.

BIAP called on the government to partner with the business sector and validate the industry’s position using independent sources, and sought for greater involvement of other stakeholders in consultations, including franchisers, sugar millers, food manufacturers, retailers, hotel and restaurant operators, and grocery and supermarket owners.

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