Exclusion of locally made coffee from sugar tax sought

MANILA, Philippines - The Philippine Association of Agriculturists Inc. (PAA) is seeking the exclusion of locally manufactured coffee with sugar from coverage of the tax on sugar-sweetened beverages (SSBs), saying its inclusion would negatively impact local agriculture.

The PAA said taxing locally grown and manufactured coffee products would harm local agriculture as all of the products’ three components—coffee, sugar and creamer—are agricultural produce.

“We are aware that lower income segments of society, including farmers consume a considerable portion of 3-in-1 coffee mixes because of its convenience and affordability,” the group said.

The PAA warned the inclusion of locally manufactured coffee with sugar from coverage of the tax on SSBs will put in peril the targets set under the country’s coffee industry roadmap.

“An increase in the prices of these products would reduce the consumption of locally produced coffee products, which will ultimately result in the reduction in the market for locally grown coffee beans,” it said.

The group said a decline in the consumption of coffee mixes would also decrease the consumption of locally grown sugar.

“We note that in the SSB tax provisions of the TRAIN (Tax reform for Acceleration and Inclusion Act), all sugar, whether locally grown or imported would be subject to the SSB tax if used in a covered beverage product. Available data from the Sugar Regulatory Commission shows that the beverage industry consumes a substantial portion of locally grown sugar. Thus, beyond just coffee mixes, the local sugar farmers stand to lose the greatest if the tax on SSBs is implemented, as a reduction in sweetened beverage sales will ultimately result in the beverage industry reducing its purchases of local sugar,” the PAA said.

The PAA said while its members believe the tax reform bill is a significant step forward, this aspect of the socioeconomic agenda must be balanced with the promotion of rural and value chain development toward increasing agricultural and rural enterprise productivity.

The group is the sole integrated professional organization of agriculturists accredited by the Professional Regulatory Commission.

It seeks to be the leading advocate for rural development and sustainable Philippine agriculture, as well as contribute to a greater awareness and deeper understanding of the local agriculture sector.