The Philippine Star

Was it all about health? Or was it just plain greed?

We’re talking here about the proposed tax on sugar drinks being part and parcel of the Comprehensive Tax Reform Program (CTRP) that currently is undergoing scrutiny in the Senate, and which is stirring up a hornet’s nest in the country’s food and beverage industry.

A counterpart bill called Tax Reform for Acceleration and Inclusion (Train) supporting the CTRP had been filed and passed in the Lower House earlier this year that, among other provisions, called for an excise tax of P10 to P20 for every liter of beverages with sugar.

The beverages that would be affected are the popular sweetened juice drinks that moms put in their children’s snack/lunch bags, carbonated beverages with added sugar or soft drinks, sugared tea, 3-in-1 coffee, all flavored drinks, powdered drinks with sugar, cereal and grain beverages, and other non-alcoholic drinks with sugar.

This is expected to raise some P40 billion to P47 billion in tax earnings that would partly offset the P140 billion that is seen to be lost from the government coffers resulting from the widening of personal income tax exemptions to more middle class Filipinos.

The Department of Finance-led CTRP aims to raise about P250 billion. Other income-augmenting initiatives are from a proposed hike in excise taxes on fuels, sales tax on automobile sales, and a revamp of value-added tax exemptions.

Haggling bout

The Senate under the Committee on Ways and Means chaired by Sen. Sonny Angara is currently studying the matter, and has announced that deliberations on the matter will commence after a commissioned study on sugar beverage taxation is completed next month.

However, initial comments by Angara have already set the tone focusing on a haggling bout centered on the amount of tax to be slapped on sugared beverages. Even the DOF has followed suit by stating an acceptable compromise of P5 to P10 per liter, apparently in response to Angara’s statement that the proposed tax in the CTRP was “somewhat high.”

Among the key indicators that the Senate study will lean on in making a learned decision would be the tax amount imposed on sugar drinks in other countries, the health issues that supposedly have been spawned by sugared drinks, and the impact on consumer classes and the whole economy.

Lobby pressure

The lobby pressure from food and beverage companies is now in full swing. The Philippine Chamber of Food Manufacturers, Inc. has stated in a study that the proposed excise tax of P10 per liter on sugar-sweetened beverages is the highest in the world.

It claims that this will burden lower-income consumers the most while hurting its 700,000-strong industry because of dampened consumption as well as the tens of thousands more sugar and coffee workers and sari-sari store owners who derive income from production or sales.

Citing the DOF’s CTRP, the industry reiterated that proposed tax would increase the cheapest juice drinks by P3, and the popular 3-in-1 coffee sachets by about P10, and a liter of soft drink by more than P10. This would negatively affect small households that consume these popular products.

AC Nielsen, in a survey last year, estimated that 80 percent of the beverages covered by the new tax is consumed by those considered low-income workers. Thus, those drinking 3-in-1 coffee would be penalized while those buying from Starbucks or any of the classier coffee shops would not.

The Beverage Industry Association of the Philippines wants a refinement of the proposed tax, this time to base the taxation on the sugar content of sweetened drinks and not on the volume of the product.

Many more affected stakeholders of the proposed sugar beverage tax have come across with their own messages, which just shows you how daunting this public debate will be, especially when crunch time comes for Congress to pass the law, which is in January of 2018.

It’s all about health

The Department of Health reiterates that the proposed sugar tax remains more a health initiative that would curb Filipinos appetite for sugar and consequently, reduce its ill-effects on those threatened by obesity and diabetes.

Just like tobacco and alcohol drinks, sugar – in its many processed forms – is a sin product whose consumption needs to be regulated if we would want to have healthier generations of Filipinos to come.

When a bottle of soft drink contains 10 spoons of sugar, and is now a staple of the average Filipino’s meal, this will explain why the Philippines is now ranked fourth in Asia in terms of prevalence of obesity cases.

Excessive intake of sugar, not just in beverages but also in food products like cakes, ice cream and fruit preserves, have been established by reputable international health organizations as the culprit in the alarming rise of obese and diabetic cases worldwide.

The cost to the affected countries’ health system has been a cause of alarm, especially for developing nations that are more burdened by the need for state-funding medical assistance by lower-income individuals.

Thus, over the years, many countries – both developed and developing – have resorted to regulatory measures like taxation or cessation of subsidies on sugar and sugared products to manage the rise in obesity and diabetes cases.

Rising awareness

It is pointless to debate on whether the proposed sugar beverage tax is a health initiative more than a revenue-generation move, or vice versa. What we should pay attention to is that measures have to be instituted on a nationwide basis to address sugar intake by individuals.

Taxation is a potent weapon, but any earning from such should go to promoting healthier lifestyles, especially among the lower classes who are more threatened by too much sugar being peddled at such an affordable price.

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