Bad food or no food at all?
Should we really make food and beverage more expensive through tax? Or, should we just tax something else?
Bad food or no food at all? This, to me, is what is now at stake with Congress opening what I deem a can of worms as it looks into all sorts of ways to tax food and beverages. Obviously feeling that a value-added tax ( VAT) of 12% on our groceries is not enough, lawmakers are looking at taxing sweetened beverages and salty and fatty food.
Absurdity reached new levels when one lawmaker, supposedly in jest, reportedly took to task restaurants that offer “unlimited rice” with meals, blaming this for obesity, diabetes, and other health issues. The State already dictates how many children families can have. Next thing we know, the State will also decide what people should wear and who they can marry.
Are we reaching a point in our national life where the State (or a few political leaders) truly believe the government should decide what people can and cannot eat? Are we now surrendering individual freedom of thought and action with respect to personal nutrition? Through tax, is the State already dictating how people should live their lives?
If the State limits tax exemptions to a maximum of four dependents, isn’t that a way of telling you not to have more than four children? If the State taxes sweetened beverages and salty and fatty foods, isn’t that a way of telling you not to consume these things? If the State taxes cigarettes and liquor, isn’t this a way of stopping you from buying them?
In this sense, isn’t additional taxation on consumption like a tax on sweetened beverage and salty and fatty food a limitation more on the poor rather than the rich? The rich and poor both consume. The only difference is that the rich can afford more things, the middle income can afford some things, and the poor can afford only a few things.
Here’s the thing: to avoid the tax, you mustn’t consume. No sweet drinks, no salty and fatty foods. And, if ever, no more unlimited rice. But, what if to get you daily nutritional needs, all you can afford are sweet drinks, salty food, fatty food, and unlimited rice meals? Where does this put you? You must eat to survive, right? A case of bad but cheap food versus no food at all?
At least one expert on public health, Doctor Antonio Dans of the UP College of Medicine, is concerned that taxing food and beverages could even worsen health outcomes. In an interview with CNN Philippines sometime last year, he noted that “undernutrition” was a greater concern in the country than diabetes and obesity.
Citing data from the state-run Food and Nutrition Research Institute (FNRI), he noted that only 31% of Filipino households receive their recommended energy intake, prompting him to declare that, “It doesn’t make sense to me to restrict calories in a country where insufficient caloric intake occurs in 69% of Filipinos.”
Dans, who previously supported government efforts to tax cigarettes and liquor, also said that a “sweet” tax cannot be likened to a “sin tax” primarily there are no healthy ways to use tobacco or liquor. But, sugar — even through cheap junk food — is actually an essential nutrient in a daily diet. “It’s unhealthy food, yes, but that’s better than no food at all,” he added.
“The sad truth is, unhealthy food is more affordable than healthy food,” Dans told CNN Philippines. And this, to me, is the crux of the matter. People eat what they can afford. And if all they can afford are food and drinks that the government deems unhealthy, what are they to do when these items become more expensive because of taxes?
Government subsidies and cash programs are all temporary, and will help the poorest of the poor only for a while. A tax, however, once legislated, is not necessarily time- bound. It is, practically, forever. So, how are the poor to deal with higher food and beverage prices one subsidies and cash programs end?
I have been accused by one reader of lobbying for beverage manufacturers by opposing the proposed tax on sweetened beverages, and writing about what I perceive to be the defects of the proposal. Truth be told, I am lobbying. This, I admit. But, not for drinks makers but for millions of poor and middle-income Filipinos like me whose food and drinks are about to become more expensive because of taxes. I know we need more taxes to pay for infrastructure, but should these revenues come from food and beverage?
The government can go ahead and impose higher taxes on tobacco and alcohol products; on oil and fuel; on motor vehicles; and, on jewelry. It can even scrap more VAT exemptions, except those for seniors. But, food and beverage for general consumption should remain free from excise taxes. Many food and beverage have already been subject to VAT, why even consider an addition like excise tax on sweet and salty and fatty stuff ?
The Beverage Industry Association of the Philippines (BIAP), in a news report, has noted that beverages that would be affected by the proposed sweet tax are those consumed by the majority, particularly those in the lower socioeconomic classes. These include nonalcoholic beverages such as 3-in-1 coffee, juice, and soft drinks.
And, citing a University of Asia and the Pacific (UA&P) economic impact study in 2016, BIAP claimed that the proposed sweet beverage tax will raise the average prices of instant coffee (3-in-1) to P8 from P5; powdered juice concentrate to P19 from P9, and sweetened tea drinks to P30 from P20.
Meantime, the latest price survey of the Department of Finance also show that with the P10 per liter tax on sweet beverages, the retail prices of a one-liter Coca-Cola bottle will increase from P22 to P34; sachet prices of powdered drinks Nestea, Tang, or Eight O’ Clock will increase from P9 to P20; and, 3-in-1 coffee from P5 to P8.
Food manufacturers have also warned of a 0.5% contraction in the gross domestic product (GDP) and the loss of jobs in the manufacturing industry. Also citing the UA&P study, the Philippine Chamber of Food Manufacturers, Inc. said: “the beverage industry is forecasted to lose almost 44% of its volume because of the tax.”
The chamber also claimed that the excise tax on sugar-sweetened beverages “would cost the economy a net loss of more than P60 billion,” as the estimated P38.74 billion in revenue gain would be offset by P101.55 billion in losses from declines in both industry sales and production.
It is going to be a tough sell to convince the public to go along with the House plan to impose an excise tax on food and drinks. The Senate, moving forward, should help the public by finding more creative ways to raise revenues. My bottom line is this: Should we really make food and beverage more expensive through tax? Or, should we just tax something else?