Beverage makers firm up stance against SSB tax

The Beverage Industry Association of the Philippines (BIAP), in an updated position paper on the beverage tax under House Bill 5636 submitted to the Senate, remained firm in its opposition to the proposed measure, warning of substantial decrease in industry revenues as well as potential job losses.

BIAP said the price increase would result to a drop of between 33 percent and 75 percent in sugar-sweetened beverage (SSB) volumes, shifting volume to informal beverages that are unregulated.

A drop in SSB volumes would substantially result to a reduction in sugar purchases which in turn would adversely affect sugar farmers, the group said.

The BIAP further warned the proposed SSB tax could imperil over 130,000 direct and indirect jobs across all business activities of the beverage industry.

“The resulting drop in business volume and job losses will lead to the reduction of tax collection from corporate income, personal income, and value added tax. This will offset any expected revenue from the SSB tax,” the group said.

“This proposed tax will inevitably dissuade local and international investors,” it added.

The beverage industry is reported to have a combined annual revenue of approximately P170 billion.

Aside from its economic impact, the BIAP said the proposed SSB tax is also seen hurting low income families as products that would be covered by the measure are commonly purchased particularly by those in the lower socio-economic classes.

The group also stressed that the move would not address the issue of obesity and diabetes in the Philippines.

“The proposed tax is discriminatory. It applies to a single category, manufactured and pre-packaged beverages, when in fact, there are other categories that contribute to obesity and diabetes,” it said.

In line with its opposition, however, the BIAP is proposing to the government and legislators three alternative tax options.

The first proposal is to base the tax on caloric sweetener content as adopted in countries like the United Kingdom and Singapore.

A second option is to impose a P10 per kilogram tax on all caloric sweeteners used in beverages only.

“Unlike HB 5636 (P10 to P20 per liter tax) – which taxes water content more than the caloric sweetener content of a particular beverage – this option (P10 per kilogram) will only tax the quantity of caloric sweetener used in beverages, as indicated in the nutrition information panel. Under a P10 per kilogram tax on caloric sweeteners, the price increase on the products will range up to 12 percent, which may burden the consumers less as opposed to a 40 to 200 percent increase under HB 5636,” the BIAP said.

A third option is P5 per kilogram tax on all caloric sweeteners used as a raw material.

“Compared to HB 5636, the P5 per kilogram tax on all caloric sweeteners used as a raw material will affect all users of caloric sweeteners, thus, broadening the tax base beyond just the beverage industry,” the group said.