BIAP opposes excise tax on beverages

MANILA, Philippines -  The proposed increase in excise tax on sugar-sweetened beverages will likely hinder economic growth and increase production cost of several goods, which would eventually trickle down to consumers, an industry group said.

The Beverage Industry Association of the Philippines (BIAP) continues to oppose House Bill 292 that imposes an additional 10 percent tax per liter on sugar-sweetened beverages.

The group said the bill would not achieve its target of curbing obesity and increasing government revenue collection, but instead raise the prices of several consumer goods and eventually hinder economic growth.

“The proposed tax is predicted to raise the prices of consumer goods and to ultimately have the most impact on the poor and poorest segments,” BIAP said.

For instance, instant coffee would see a price increase of 48 percent after an excise tax of P10 per liter is imposed, raising the price of a sachet of coffee from the current P5 to P8.

Prices of powdered concentrate will also increase by more than 100 percent or from P9 per sachet to P19.

Prices of tea drinks, likewise, will jump 52 percent from the current P20 to P30 per bottle.

BIAP said research findings showed that compared to consumers in other countries, Filipinos are not over-consuming sugar-sweetened beverages due to the smaller package size and less frequent consumption.

Data from the World Health Organization (WHO) showed that out of 192 countries in the world obesity index, the Philippines only ranked 155th.

“Furthermore, it is not in the higher tier of the Asian countries,” the group said.

On the impact of the tax proposal on the national economy, BIAP said the proposed tax would result in reduced government revenues, economic contraction, and job losses.

Basing on 2016 statistics from the University of Asia and the Pacific Economic Impact Study (2016) and AC Nielsen Data, BIAP said the proposed tax would affect the income of sari-sari stores, which make up 91 percent of retail stores in the country. Thirty one percent of sari-sari store sales come from carbonated beverages.

Furthermore, the group indicated a possible decline of about P20 billion in sales of sugar-sweetened beverages and a P51 billion drop in the revenue of related industries.

There is also a foreseen P30 billion loss in government revenue from value added tax and corporate income tax as well as P63 billion in total loss to the local economy.

The House Ways and Means committee recently said it wants to adopt HB 292 as part of the tax reform plan.