■ TRAIN TAX ON SUGARY DRINKS CHANGING CONSUMPTION PATTERNS, RETAILER SAYS
Since an excise tax was placed on sweetened beverages, sharp declines have been noted on the sale of these items, said Philippine Retail Association Cebu Chapter president Robert Go
Inflation will ease in this quarter, the Bangko Sentral ng Pilipinas has projected. In the past six months, though, when inflation averaged five percent in Central Visayas, a retail leader has observed changes in consumer behavior. Robert Go, president of the Philippine Retail Association’s Cebu Chapter, estimated a 10- to 20-percent drop in juice and softdrink sales in 45 Prince Hypermart branches spread all over the country. When the TRAIN Law took effect at the start of the year, consumers began shifting to other products or buying only the essentials, he said. The Tax Reform for Acceleration and Inclusion Law, the first of five tax reform packages of the Duterte administration, increased the amount of tax-free personal income but also introduced an excise tax on sweetened beverages.
It’s not only consumers who bear the brunt of high prices of some commodities.
Retailers, too, are seeing a shift in consumer buying that has affected retail sales.
Robert Go, president of the Philippine Retail Association (PRA)- Cebu Chapter, saw a drop in consumption of sugar-based products like juices and soft drinks since the effectivity of the Tax Reform for Acceleration and Inclusion (TRAIN) Law at the start of the year.
Go said an estimated 10 to 20 percent drop in juice and soft drink consumption was noted in his 45 Prince Hypermart branches around the country.
He explained that price is one the essential factors consumers consider when they purchase products and when there are price adjustments, consumers also tend to adjust their buying behavior.
“When the TRAIN Law was passed and consumers started to feel its impact, we saw changes in preferences. Some have shifted to other products and prioritized more on buying the essentials, like food,” said Go.
Specifically, one of the products which they saw a sharp decline was on sweetened beverages.
“We saw lower buying or less demand for sweetened drinks,” he said.
But Go quickly pointed out that since Filipinos naturally like sweet items, buying of any sweetened product including beverages continue.
He revealed that the decline is more identified in the urban areas, where consumers are more aware of the price adjustments.
“But on the other hand, there is growth in the economy. There is more money, more employment so even if there are price adjustments, people will continue to buy,” said Go.
“I believe that as soon as prices will stabilize, and consumers will get used to it, the robust buying will go back to its healthy state,” he added.
Because of the lower demand, retailers including Prince Hypermart have also adjusted their purchase orders from their suppliers.
“Even if there’s less demand, we still need to fill the shelves,” said Go.
Excise taxes on sweetened beverages was one of the new taxes imposed under the TRAIN Law, which took effect last Jan. 1.
Sweetened beverages are levied at P6 or P12 per liter of volume capacity, depending on the type of added sweetener.
The new excise tax covered sweetened juice drinks and tea; all carbonated beverages (soft drinks); flavored water; energy and sports drinks; cereal and grain beverages; other powdered drinks not classified as milk, juice, tea and coffee; and other non-alcoholic beverages that contain added sugar.
Earlier, Go clarified that high prices of commodities should not be blamed on TRAIN alone, as there are other factors that triggered high inflation.
He cited the weak peso, high prices of fuel in the world market, as well as the migration of manufacturing companies to other countries in the Asean bloc.
The Bangko Sentral ng Pilipinas (BSP) expects a drop in inflation in the next quarter.
Central Visayas’ June inflation rate stood at 6.4 percent. Its average inflation in the first half stood at five percent. /
I believe that as soon as prices will stabilize, and consumers will get used to it, the robust buying will go back to its healthy state. ROBERT GO