Sugar prices up on higher demand

The average retail prices of sugar rose in the second week of April on increased demand as well as on speculations that traders have increased their prices in preparation for the payment of the advance 12-percent value added tax (VAT) next month.

According to the Sugar Regulatory Administration (SRA), the average retail price of raw sugar in Metro Manila markets rose by P1 to P44.50 per kilogram as of April 10 from P43.50 as of April 7.

The average retail price of washed sugar was placed at P48.50 per kilogram as of April 10 from P47.50 per kilogram on April 7. The average retail price of refined sugar, meanwhile, was placed at P51.50 per kilogram from P51 per kilogram.

SRA administrator Ma. Regina Martin said the increase in price may be attributed to increased demand during the summer season brought about by higher consumption of cold drinks.

"Also, we are nearing the end of the milling season," she said. An industry source who declined to be identified, said some traders may have been increasing their prices by at least P50 per 50-kilogram bag in preparation for the implementation of the payment of the advance 12-percent VAT on raw and refined sugar in May.

Martin said the new revenue regulation would be implemented on May 1, with the condition that the payment of the advance VAT should not be shouldered by consumers.

During the last week of March, the Bureau of Internal Revenue (BIR) published a new revenue regulation indicating that sellers of refined and raw sugar are required to pay in advance the 12percent VAT before the sugar is withdrawn from the warehouses.

The BIR also maintained that only raw cane sugar or muscovado sugar is exempt from payment of VAT because it is produced without the use of any mechanical device.

The issuance of the new revenue regulation effectively snubbed the petition of the SRA to postpone the implementation until the next crop year (that starts in September) to avoid confusion in the implementation and prevent spikes in prices.

The SRA is also challenging the definition of raw sugar in the new revenue regulation, noting that based on a 1989 BIR regulation, raw sugar is free from tax.

The BIR argued in the new regulation that any sugar produced using the centrifugal process is not exempt from VAT.