Asia Brewery bucks alcohol tax hike

MANILA, Philippines - Asia Brewery Inc., thumbed down yesterday the government’s proposal to increase taxes on alcohol products, saying that the worldwide financial turmoil is affecting its operations.

The beverage and liquor company is owned by taipan Lucio Tan, hailed by Forbes Magazine as the country’s second richest Filipino with a net worth of $1.5 billion.

In a position paper presented at the House of Representatives, Asia Brewery chief finance officer Jose Gabriel Olives said raising taxes would be detrimental to the liquor market.

He said any tax increase would result in a financial burden for the company and also affect liquor consumers.

Olives warned that Asia Brewery would have to raise prices if the government slaps higher taxes on alcohol products.

“We respectfully, but firmly, oppose any tax increases during these critical economic times and especially, in the form and magnitude that the bill proposes. It will result in an intolerably heavy financial burden on our company as well as place a grossly inequitable share of the tax increase on the poorest segment of the working population. The consequential price increases will certainly result in a collapse of the market for economy priced beers and take with it a large portion of the community-based distribution and retail businesses that depend on it,” Olives said during a hearing yesterday by the House ways and means committee on proposals to raise alcohol and cigarettes.

Asia Brewery’s Olives said that while the company recognizes the government’s need to raise taxes, it does not agree with the timing and the design of the proposal.

“Although we recognize government’s need to raise revenues and simplify taxation policies, we firmly believe that the design and timing of the proposed bill will be detrimental to the very objectives it espouses. We would like to respectfully remind this body that in a presentation more than three years ago, we stated that an ad valorem tax system for the beer industry would be a more effective and equitable structure to address the government objectives of increasing the tax revenue base and automatically participating in industry price adjustments,” Olives said.

He added that in light of the “uncertain economic situation and government’s objectives of preserving jobs and promoting economic growth, it is our firm conviction that there should be no tax increases other than that already prescribed by existing laws.”

As such, he said Asia Brewery prefers to retain the current tax system for now.

Asia Brewery’s main products are Beer na Beer and Colt 45.

The proposal pending in Congress seeks to unify the tax rate under a single scheme and raise the specific taxes on various alcohol products.