SSB tax violates WTO rules – US business groups

The lobby against the imposition of new taxes on sugar sweetened beverages has reached a crescendo with American business organizations now providing a stronger voice, saying the new multi-tiered tax approach is unfair to American companies and is in violation of the rules of the World Trade Organization (WTO).

“While we recognize the government’s public policy objective of increasing its fiscal revenue resources for infrastructure investment purposes, the multi-tiered approach, treats US companies unfairly and would be inconsistent with the Philippines’ WTO obligations by imposing higher taxes on imported versus domestic sweeteners,” said the US-ASEAN Business Council (USABC) and the US Chamber of Commerce.

These two groups lend their support to the positions of American Chamber of Commerce-Manila (AMCHAM) and the Beverage Industry Association of the Philippines (BIAP). The country’s biggest soda manufacturers are US firms.

“The American business community in the Philippines firmly opposes the proposed relatively high tax levels and multi-tiered approach contained in both the House and Senate's final versions of the bill,” said the groups’ statement.

According to these American business groups, both aspects of the legislation are at odds with the Philippine government’s objective of making the country more competitive in attracting foreign direct investment.

“If SSBs are going to be taxed, we strongly encourage the government to structure the taxes in a way that treats all sweeteners, regardless of source or origin, equally,” the statement said.

Instead of the multi-tiered approach, the American business groups urged the bicameral committee to consider lowering the proposed tax rates or staggering the tax implementation similar to fuel in the final version of the bill.

They further urged the bicameral committee to agree to an approach which will generate additional government revenue, be consistent with the Philippines’ WTO commitments , and treat American companies doing business with the Philippines fairly..

This is consistent with President Duterte’s ten-point agenda by demonstrating the Philippine’s commitment to sustainable and inclusive economic growth for Filipino SMEs and consumers, in ways which are consistent with international best practices, the groups added.

Such an approach would also send a very positive signal to American investors about doing business in the Philippines, and would enhance US companies’ ability to invest more resources in the country and support the government's broader economic development goals, the American business groups’ said.

The American private sector also shared the concerns expressed by domestic stakeholders including the BIAP and the Philippine Association of Stores and Carinderia Owners (PASCO) on the negative economic impacts to both domestic SMEs and lower income Filipinos of the relatively high tax rates contained in both the House and Senate bills.