FPI asks PCC to look into SSB taxation for being ‘anti-competition’

Domestic manufacturers are asking the Philippine Competition Commission (PCC) to step into the proposed taxation on sugar sweetened beverages (SSBs) saying the proposed bill is “anti-competition” as it favors a certain business segment that caters to the poor over another that serves the more affluent market.

Dr. Jesus L. Arranza, chairman of the Federation of Philippine Industries (FPI) – an organization composed of 132 corporation members and 38 industry associations, said they opposed the proposed tax on SSBs because it is discriminatory, regressive, and anti-poor.

“I think it is about time for PCC to come out with their opinion considering this is a subject matter being discussed now, not on company mergers,” said Arranza. PCC is an independent quasijudicial body created to promote and maintain market competition by regulating anti-competitive conduct. Its main role is to ensure fair competition in the market for the benefit of consumers and businesses.

The proposed taxation is going to slap taxes on SSBs or the manufactured drinks, including instant coffee, energy drinks and powdered juice drinks, but it exempts other SSBs being sold at coffee shops that blend their own beverages or those that do not use pre-packaged instant coffee or powdered juice drinks.

“If the law favors a segment, it will create favoritism and that is against the Constitution, which ensures equal protection of the law,” said Arranza.

As it currently appears in the latest Senate version, the TRAIN ACT or Senate Bill 1952 levies price increase of R10 per liter for drinks using high-fructose corn syrup, R5 per liter for drinks using sugar, and R3 per liter for drinks using non-caloric sweeteners (artificial sugar such as Splenda, Equal, Stevia).

If passed, prices of these products – which covers powdered juice drinks, soft drinks, and energy drinks – will increase by 25 percent to 50 percent. These price increases are expected to result in a 40 percent – 60 percent drop in micro enterprises sales, affecting the livelihood of 1.3 million sari-sari stores and carinderia owners. This industry has estimated total investments of R130 billion and directly employs 30,000 Filipinos.

“In my way of reading, we have a strong case because you are removing market competition indirectly through legislation,” he pointed out.

Arranza even noted that this anticompetition issue may be hit in two fronts: unconstitutional and the other is the special law – TRAIN ACT.

“The constitutional issue has a heavier weight, but it depends on what our lawyers will say once the law is passed. There could be two hits in this issue but I don’t threaten anyone,” he added.

FPI, however, whose members include SSB manufacturers and beverage association, is still open to discussion and settle their differences.

“I don’t begrudge those guys (bill proponents) because they really think they are right,” he said.

More than the business impact, the group also slammed the proponents’ claims that it is a health measure aimed at curbing rising obesity and diabetes among Filipinos.

“There is no local study that directly correlates sweetened drinks as direct causative factors. In fact, just less than 2 percent of the Filipino caloric intake comes from sugar and syrup,” he said.

“The incidence of obesity and of being overweight is more prevalent among the higher-income classes, whose common sources of sugar-containing goods are exempt from the tax,” Arranza concluded. (BCM)