Tax on sweetened drinks to hurt businesses, Coke says

Joel Guinto, ABS-CBN News

Posted at May 10 2017 09:07 AM | Updated as of May 10 2017 05:53 PM

Tax on sweetened drinks to hurt businesses, Coke says 1
Coca-Cola FEMSA CEO John Santa Maria speaks to reporters in Mexico City. ABS-CBN News

MEXICO CITY - A planned tax on sugary drinks will likely stoke inflation and hurt manufacturers, sugar farmers and small retailers, the head of the world's largest franchise bottler of Coca-Cola products said Tuesday.

Coca-Cola FEMSA CEO John Santa Maria cited the cases of Ecuador, where a 30-percent tax on revenue from sweetened drinks caused sugar prices to go down and Philadelphia, where a levy of one-cent per ounce drove some companies to consider job cuts.

A Congressional committee last week approved a bill that seeks a P10 per liter tax on sweetened drinks, including softdrinks and 3-in-1 coffee. Lawmakers are hoping to pass a broad tax measure at the House of Representatives level by June to help President Rodrigo Duterte fund an ambitious P8-trillion infrastructure overhaul.

"Obviously any tax is negative," Santa Maria told reporters here. "It depends on how it takes form and how deep it becomes. I don't think right now the Philippine consumer needs another tax."

"I think it will be very very bad not only for out industry but for small retailers," he said.

Finance Undersecretary Karl Kendrick Chua had said that softdrink companies would survive such a levy, the way cigarette-makers did in the face of higher duties on tobacco products.

Such a tax will amount to "discrimination" against softdrink companies, Santa Maria said.

"If you should go out there and tax it, then tax the ingredient. Tax sugar per se. That's fairer," he said.

"The taxing of beverages is a very sexy way to increase taxes, but really, the issue is if you think people are going to alter the way people consume, there's no fact base for that," he said.

Quirino Representative Dakila Cua, whose ways and means committee passed the bill taxing sweetened drinks, said it would raise P40 billion to P47 billion in revenue and discourage consumption of drinks that have been blamed for obesity and diabetes

Aside from sugary drinks, Duterte's economic team also asked Congress to raise taxes on fuel and cars to help offset a reduction in income taxes that he promised during last year's presidential elections.