PH sugar tax is about revenues, not health

Consumers are not aware of the impact of the sugar-sweetened beverages tax on their favorite drink, like the citizens of Cook County, Illinois, USA. 

Lawmakers debating on the bill do not realize that the proposed tax will mostly affect the poor, who will suffer more from the SSB tax than other citizens. Most of the consumers of beverages in the country are from the D&E demographic. If the sugar bill is passed, many can no longer afford to buy the drinks they enjoy.

Like the Cook County soda tax, the SSB tax in the Philippines was never about health. Lawmakers claim it aims to help curb obesity and diabetes in this country. These claims have been debunked by a study of the Food and Nutrition Research Institute of the Department of Science and Technology.

Obesity and diabetes are caused by several factors, not just the consumption of sweetened beverages. Filipinos do not even consume a lot of sweetened beverages, which account for about 2 percent of their diet. Almost 50 percent of the Filipino diet is actually rice. 

Like the Cook County soda tax, the SSB tax is raising revenues to enable the government to fund its budget. The SSB tax is part of the Tax Reform for Acceleration and Inclusion Act, a tax package that aims to lower income tax and expand the value added tax. The government plans to impose a tax on purchases to cover the expected budget deficit from reducing the income tax.

A World Bank data in 2014 showed that 75 percent of the total domestic workforce in the Philippines is classified as informal while 25 percent belonged to the formal sector. The latter will reap the benefit of a reduced income tax but everybodywill be affected by the price increase of goods. 

Like the Cook County soda tax, the SSB tax will affect the livelihood of many citizens, including the micro, small and medium enterprises. The Philippine Association of Stores and Carinderia Owners, for one, has opposed the tax, fearing that it will kill micro enterprises. If their customers can no longer afford to pay for powdered juice or soft drinks, they will eventually stop buying. SSBs account for 30 percent of their revenue—a chunk they can’t afford to lose.

Industry groups oppose

Even big industry groups are not convinced about the merits of the sugar tax. The Federation of Philippine Industries Inc. labeled the proposed tax on sugar-sweetened beverages as “anti-poor.”

FPI president Jess Arranza earlier said the proposed measure was also discriminatory to people who were relying on sugar to boost their energy. “If they are taxing beverages with sugar, then they should tax all. How about the coffee shops like Starbucks and Seattle’s Best? Why only three-in-one coffee mixes, juices and softdrinks? But our stand is for the government to exclude sugary drinks from taxes,” he said.

A Finance official said the proposed inclusion of taxes on sugar-sweetened beverages could generate an additional P47 billion for the government coffers under package 2 of the Comprehensive Tax Reform Program.

Under the CTRP, sugar-laden drinks will be imposed an excise tax of P10 per liter. Studies showed instant coffee would see a price increase of 48.4 percent after an excise tax of P10 per liter was imposed, raising the price of a sachet of coffee from P5 to P8.

The price of powdered concentrate will go up by 108.6 percent, or from P9 per sachet to P19, while prices of tea drinks will jump 52.5 percent, from the current P20 to P30 per bottle.

The government, perhaps, can craft other tax alternatives to ease the burden on the poor and the MSMEs. Lawmakers, with the next elections just less than two years away, should be wary of their actions as the Filipinos are watching the proceedings in Congress.

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Topics: Ray Eñano , PH sugar tax , revenues , health , sugar-sweetened beverages tax
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