Mondelēz bucks higher tax on sweetened drinks

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FOOD and beverage company Mondelez International Inc. has asked the government for fair taxation amid the Finance department’s plan to raise some P47 billion from taxes on sugar-sweetened beverages (SSB).

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“We are now proposing to the government to step back and have a fair taxation for SSB, because a lot of products will be slapped with the P20 per liter excise tax,” Shanahan Chua, head of corporate and government affairs at Mondelez Philippines Inc., told reporters on Thursday.

Mondelēz is an American multinational confectionery, food, and beverage company. It distributes, among others, Tang powdered juice in the country.

“So, it’s not just a 100-percent rate maximum increase. It is really over 200 percent, just like in the case of Tang. The public needs to be aware that it’s not just the carbonated drink [soft drinks]that will be impacted. There are other beverages like powdered juices and three-in-one coffee which really target the C, D and E markets. The poor will be affected the most,” Chua added.

The Finance department proposal is to slap a P10 excise tax for every liter of beverage using pure Philippine sugar and P20 per liter on products using other sweeteners.

“So, if you look at our product like Tang, the price increase would be P20, because we are a fully imported finished good. We are going to be taxed P20, so the base price of a 25-gram sachet of powdered juice that could make a one-liter drink would increase from P9 or P11 including VAT at sari-sari stores, to over P30,” Chua said.

“For Tang, our consumers are mostly the C, D and E market. I don’t think the D and E consumers will be able to afford over P30 Tang. They have been buying it for less than P11 at sari-sari stores.”

Chua said that the tax computation should be based on the sugar content and not on the whole volume of the product.

Mondelez is one of the 13 member-companies of the Beverage Industry Association of the Philippines, which operates more than 100 manufacturing sites with over 35,000 direct employees and P130 billion in investments in the country.

In May, the House of Representatives passed House Bill (HB) 5636, the first package of tax reforms, which includes the imposition of P10 or P20 excise tax per liter of sugar-sweetened beverages such as soft drinks, sweetened tea, sweetened coffee, carbonated beverages with added sugar, flavored water, energy drinks, sports drinks, powdered drinks not classified as milk, juice, tea and coffee, cereal and grain beverages and non-alcoholic beverages that contain added sugar.

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