DOF unveils sugar tax impact on retail prices

To encourage Filipinos to adopt healthy habits, retail prices of some unhealthy drinks are poised to rise by more than double once the proposed measure seeking higher levies on sugar-sweetened beverages is passed into law.

Based on the latest price survey of the Department of Finance (DOF), the increase in retail prices of sugarsweetened beverages would range between two percent and 140 percent once the Duterte administration’s tax reform bill is passed into law.

But Finance Undersecretary Karl Kendrick T. Chua explained the inclusion of sugar tax in the House tax reform substitute bill does not intend to generate more revenues, but to discourage consumers in buying unhealthy drinks.

Chua also said the government should adopt a simple tax treatment on sugary drinks without any distinction between those products in liquid or power form.

“This is designed primary as a health measure,” Chua said. “What we learned, for instance in Mexico, is that you have to have a simple way [of taxation], otherwise, when the tax administration becomes complicated, you’ll end up not collecting.”

Based on DOF’s latest price survey, the retail prices of soft-drinks could rise by at least R3.7 to R16.8 if the tax reform measure is passed into law, while prices of sports and energy drinks, like Cobra, would increase by around P3.9.

In particular, the price of a 250 millilitre bottle Coca-Cola will increase by R2.8, Coca-Cola Light 1.5 liter as well as Pepsi Max 1.5 liter by R16.8, Coca-Cola one liter by R11.2 and Sprite Zero in a 330 millilitre can by R3.7.

On the other hand, retail prices of sweetened tea and coffee, like Yakut and C2 apple green tea, will increase by R0.9 and R5.9, respectively.

Meanwhile, prices of concentrated and powered fruit drinks are seen to skyrocket should House Bill 5636 is passed into law by Congress.

Based on the DOF data, sachet prices of powered drinks Nestea, Tang Orange Juice, Eight O’ Clock will increase by R11.2, while Mogul Mogu, Zest-O Big and Del Monte Fit n Right will rise R3.6, R2.8 and R11.2, respectively.

Earlier, House lawmakers came up with a substitute tax reform bill, which included the proposed R10 excise tax on every liter sugar-sweetened beverage.

Chua said the government is poised to generate R47 billion in fresh revenues once the excise tax on sugar-sweetened beverages is implemented.

“This is a health measure. It does not matter if it’s powder or liquid [form], it’s the same [tax] treatment… that’s the good practice that we learned worldwide,” the finance official said.

Meanwhile, Beverage Industry Association of the Philippines (BIAP) opposed the proposed higher levies on sugary drinks, noting this will likely hinder economic growth and increase production cost of several goods.

The BIAP also said the proposal would not achieve its target of curbing obesity and increasing government revenue collection, but instead raise the prices of several consumer goods and eventually hinder economic growth.