SMB, Asia Brewery buck uniform tax on beer

MANILA, Philippines – The country’s largest beer makers -- San Miguel Brewery Inc. and Asia Brewery Inc. -- have joined forces to denounce a proposed measure that would impose a single tax on all beer products, saying such a move could lead to the collapse of the industry.

Under the Department of Finance-backed House Bill 5727, a uniform tax rate of P25 per liter for all beer products shall be imposed regardless whether they are currently classified as low-priced, medium-priced or high-priced.

 The two beer behemoths said the imposition of the single tax scheme is “anti-poor” and “destructive” as it could result in job losses and loss of livelihood opportunities for thousands of Filipino families who depend on the distribution and retail sales of these low-priced beer products.

 ABI and SMB said the excise tax of low-priced beer will shoot up by 140 percent to P25 per liter from the current P10.41 per liter once the measure is passed.

Medium-priced beer, which is currently being taxed P15.49 per liter, will experience a 61-percent jump in tax rate as well.

 On the other hand, the excise tax on high-end beer brands, including imported brands, will only rise by 21 percent from the current tax of P20.57 per liter.

The two beer makers asked that the proposed measure be junked, pointing out that the current three-tiered specific tax structure under Republic Act 9334 which provides for a rate increase of eight percent every two years has been effective in promoting both volumes and tax revenue collection growth from the beer industry.

From 2004 to 2011, excise tax collection from the beer industry increased by 43 percent since RA 9334 was implemented in spite of modest industry volume growth during the same period, the two firms said.

“It is our firm conviction that retaining the proven three-tiered structure for specific taxes with provisions for inflation adjustments will provide a win-win solution for the government and the industry,” they stressed.

The two manufacturers fear that since these beer products will no longer be within reach of poor consumers, which comprise the majority beer market, they will shift to hard liquor and very possibly, unregulated liquor products.