SSB tax to disrupt market balance – FPI

MANILA, Philippines — The proposed tax on sugar sweetened beverages (SSB) is seen to divide the market into unequal segments as it favors businesses catering to the higher income sector, a group of manufacturers said.

In a press briefing yesterday, Federation of Philippine Industries (FPI) chairman Jesus Lim Arranza said the proposed SSB tax is anti-poor as it target staples that are not just patronized by lower-income households, but also those that are the source of livelihood of sari-sari stores.

The SSB tax proposes a P10 per liter tax on beverages using high-fructose corn syrup, P5 per liter on drinks using sugar, and P3 per liter on drinks using non-caloric sweeteners. The tax will cover beverages such as energy drinks, powdered juice drinks and soft drinks.

Arranza said the implementation of the tax would cause a 40 to 60 percent sales slump in sari-sari stores and other micro-enterprises, triggered by a 25 to 50 percent price increase of basic commodities.

“It is essentially a pro-rich tax for exempting goods patronized by those in the higher-income brackets, who have alternative and more expensive sources for their sugar-sweetened beverages,” Arranza said.

The FPI chairman said the tax measure also creates a market segmentation among industries, favoring businesses in the higher-end which also offer sugar-sweetened products.

Arranza cited as examples coffee and pastry shops that cater to higher-income households, which the SSB tax will not be imposed on.

“This discriminatory nature also promotes a radical imbalance in the business landscape. The rule of taxation must be uniform and equitable. The SSB tax in its current form stands in violation of competition laws, equal protection of law, and even free-trade agreements that the Philippines is signatory to. It burdens select industries and favors one market over another,”Arranza said.

In line with this, Arranza said the Philippine Competition Commission (PCC) should step in and deal with the issue.

“I think it is about time for the PCC to come up with their opinion, considering this is a subject matter being discussed openly,” Arranza said.

Arranza added that SSB tax is considered by the industry as a threat to the health and growth of Philippine businesses and will influence a dearth in new investments, compel a downsizing in operations, and enact multi-sector job losses.

Moreover, the FPI official said the tax imposed on non-caloric sweeteners would also pose an additional burden to senior citizens and to those who are already watching their sugar intake due to conditions like diabetes, opposing the objective of the proposed tax, which is to promote better health for Filipinos.

The SSB tax claims to be a health measure aimed at curbing rising incidences of diabetes and obesity in the country.

“We appeal to our honorable lawmakers to recognize the SSB tax as not only a danger to the welfare and livelihood of our more marginalized citizens, but as a threat to the robustness of the Philippine economy.We urge our lawmakers to reevaluate the SSB tax in favor of a non-discriminatory tax scheme,” Arranza said.