Beverage makers oppose measure
MANILA, Philippines - The House ways and means committee's technical working group is now studying the proposed tax rate for soft drinks and sweetened beverages.
The proposal is aimed at partly raising revenues to offset the higher tax exemptions for bonuses and also to discourage the consumption of softdrinks and sweetened beverages to lower the risk of obesity, diabetes and heart diseases among Filipinos.
The committee continued to deliberate on House Bill 3365 filed by Rep. Estrelita Suansing which proposes the imposition of a 10 percent ad valorem tax on softdrinks and carbonated drinks.
The bill seeks to earmark revenues from this tax for the rehabilitation fund for victims of calamities.
"So ang gusto natin ay for every tax exemption na maibibigay natin kung ano man ang revenue impact ay dapat mahanapan ng kapalit para mapagtakpan ang nawala. So sa araw na ito ang aming napag-usapan ay yong sugar sweetened beverages. So lahat ng idagdag ng asukal na nagko-cause ng obesity, magko-cause ng heart disease na siyang pinagmumulan ng mga noncommunicable diseases like heart attack ay papatawan din natin o pinopropose na patawan din ng buwis," ways and means committee chairman Miro Quimbo said.
Quimbo said there is no final tax rate yet. The bill was referred to the technical working group.
"Very complex yong pagpapataw ng buwis so dahil ibabase natin ito hindi sa amount, meaning hindi sa laki ng bote, hindi sa volume ng iniinum.This will be a specific tax base on the sugar content because it is a health measure. So dapat bigyan natin ito ng tutok because in the ideal ang tao ay hindi dapat lumalampas ng tatlong teaspoons ng sugar sa isang araw," he said.
Quimbo said companies should be encouraged to produce more drinks with less sugar content and more natural ingredients.
In the bill's explanatory note, Suansing noted flavoured or colored syrups used in the manufacturing of softdrinks are not subject to excise tax but only to 12 percent VAT and customs duties if imported.
WHO supports tax on sugar sweetened drinks
The committee received a position paper from the World Health Organization, dated November 7, 2014.
"Currently non-communicable diseases (NCD) like cardiovascular diseases, diabetes, cancers and chronic respiratory diseases are the top killers in the Philippines. NCD risk factors such as overweight and obesity are also on the rise. Thirty one percent of Filipino adults and 12 percent of adolescents are now overweight and obese. Since 2008, prevalence of overweight and obesity in children has also been increasing," the WHO said.
The WHO further noted there is increasing concern that consumption of free sugars particularly in the form of sugar sweetened beverages-increases overall energy intake and may reduce the intake of foods containing more nutritionally adequate calories leading to an unhealthy diet, weight gain and increased risk of NCDs.
"Sugar sweetened beverages have been identified as one of the largest sources of added sugar and a top source of energy intake in modern diets. Data from the 2011 Philippines Global School Health survey show 42 percent of adolescents currently drink carbonated softdrinks one or more times per day," it added.
However, the WHO suggested expanding the coverage of the proposed tax to focus on sugar sweetened beverages instead of just carbonated drinks.
"The bill implies that only sweetened carbonated beverages will be taxed, while those sweetened non-carbonated beverages will be spared from tax. This situation will allow people to shift easily to he latter type of sugary beverages which are likely to be cheaper because of the absence of tax," it noted.
The WHO also suggested "a specific excise tax ( levied on volume and weight) per ounce or per gram of added sugar would be preferable to a sales tax or an ad valorem excise tax (levied as a percentage of price) and would provide an incentive to reduce the amount of sugar per ounce."
"Sales taxes could simply encourage the purchase of low priced brands or of large containers that cost less."
Beverage industry says bill is 'anti-poor'
In a position paper, the Beverage Industry Association of the Philippines said it is opposing the measure. The group includes members Asia Wide Refreshments, Coca-Cola, Mondelez, Pepsi, Universal Robina Corp., Philippine Sugar Millers Association and San Miguel.
"Taxation will not solve the problem of obesity and other related health issues and taxing food and drink will have a negative impact on the Philippine economy and ultimately is an anti-poor tax," the group said. "There is no scientific evidence which shows a direct correlation between softdrink consumption and obesity rates."
The group maintained all their products are safe, quality products and that they provide refreshment and hydration.
The group also reminded lawmakers that over 25,000 people are employed in the beverage manufacturing sector while over 1.2 million microentreprenurs are depending on the industry. It estimated about P46 billion have been invested in the industry.
At the same time, the Sugar Alliance of the Philippines expressed concern the tax would lead to a contraction of the market of refined sugar.
ABS-CBN talked to a softdrinks vendor who asked lawmakers not to push through with the measure since it won't stop buyers from buying softdrinks.