Proposed tax on sugary drinks to affect the poor

CEBU, Philippines - A tax expert has warned that imposing tax on sugar-sweetened beverages — including 3-in-1 coffee and powdered juices — is bound to affect ordinary Filipino consumers, as the Department of Finance is being urged to reconsider this aspect of the tax reform bill.

Raymond Abrea, president of Abrea Consulting Group, said that while the tax reform in general is not anti-poor, anything that will increase prices of basic consumer goods or transportation costs "is a threat to ordinary Filipino consumers."

He emphasized that 80 percent of consumers of these basic goods are low-income earners.

"We need to lower it down if not re really it," Abrea said in an interview with The FREEMAN yesterday.

While the DOF plans to subsidize those who will be affected, he said such move is not a long-term solution.

Abrea instead urged the government to tax more on mining, alcoholic beverages, cigarettes and luxury cars which are not considered as basic needs.

"Rather than subsidizing it, why don't we lower it down or reconsider it (the proposed tax on sugary goods)? And tax those which will not hit the poor," the tax advocate said.

The proposed per-volume tax on all sugar-sweetened beverages under the tax reform package being pushed by the Duterte administration will include basic breakfast items such as 3-in-1 coffee and powdered juices.

The bill is imposing an excise tax of P10 per liter on beverages sweetened by sugar or sugar substitutes.

Currently no other food or non-alcoholic beverage for general consumption in the country is imposed an excise tax.

Excise taxes are currently collected on oil and fuel, motor vehicles, jewelry, cigarettes and other tobacco products, and beer and liquor and other alcoholic drinks.

Sen. Sonny Angara, chair of the Senate Committee on Ways and Means, earlier expressed concerns over the proposed per-volume tax on all sugary beverages.

Angara said the current form of the bill pending before the chamber proposes a tax of P10 per liter for both milk and soft drinks.

House Bill No. 292 seeks to impose an excise tax on all “nonalcoholic beverage that contain caloric sweeteners or added sugar or artificial/noncaloric sweetener. It may be in liquid form, syrup or concentrates, or a solid mixture, that is added to water or other liquids to make a drink.”

The tax coverage includes soft drinks; nonalcoholic flavored, carbonated or noncarbonated beverages; fruit drinks and sweetened beverages consisting of diluted fruit juice; sports drinks for hydration; sweetened tea and coffee drinks; energy drinks; all nonalcoholic beverages that are ready-to-drink and in powder form with added natural or artificial sugar, among others.

Based on the latest price survey of the DOF, retail prices of a one-liter Coca-Cola bottle will increase from P22 to P34; sachet prices of powdered drinks Nestea, Tang or Eight O’ Clock will increase from P9 to P20; 3-in-1 coffee from P5 to P8.

With the current proposal, prices of some sugary drinks will increase by 50 percent. (FREEMAN)