Lopez to support food chamber position on excise tax

MANILA, Philippines -  Trade Secretary Ramon Lopez is willing to support the fight of food manufacturers against higher excise tax on sugar sweetened beverages (SSBs), but will no longer back other industry groups’ positions such as those from the business process outsourcing (BPO) and automotive sectors.

Lopez said he would support the position of food manufacturers as long as there would only be minimal change on the existing provision and additional tax would still be imposed.

“According to them, the existing provision is regardless of sugar content and the size. They proposed to index it to the sugar content. That is their position that they want to suggest in the Senate,” the trade chief said.

“For us, we do not have a problem there because there will still be revenue generation but instead of per liter, the tax will be on sugar content. In effect, it’s on the sugar usage,” he added.

Under the first package of the tax reform program approved in the House of Representatives last Wednesday, a P10 per liter excise tax of volume capacity will be imposed on SSBs.

The Philippine Chamber of Food Manufacturers Inc.  has opposed this, saying the proposed SSB excise tax is “disproportionately high” compared to those in other countries with similar taxes and it will also significantly impact consumers in the lower income bracket.

“That’s the reason why I think they are proposing minor change which is not on sugary products but on the sugar content,” Lopez said.

For Lopez, a lower rate than the P10 per liter proposed but covering a broader range of products with sugar content and not just limited to beverage would be acceptable.

“It should be a broader product range across all users of sugar,” he said.

“We can support that adjustments. It’s fine tuning. So in the Senate level if we are asked we can say we support that,” Lopez added.

When asked on whether he would support the positions of other groups such as those from the BPO and automotive sector, Lopez said “not anymore, that’s okay already.”

The IT-BPM industry has said that the proposed reduction of their incentives would put in peril the industry’s growth and competitiveness which is why they are asking for these perks to be retained.

The first package of the Department of Finance-sponsored tax reform program includes the removal of value added tax (VAT) exemption on BPOs’ sales and imports.

Once the tax reform proposal is enacted, BPO firms’ transactions would be subject to a VAT equivalent to 12 percent of gross receipts.

Automakers, meanwhile, are calling for lower excise tax increases to be slapped on new vehicles, also noting that the proposed rates under the tax reform program would dampen the industry’s growth.