DOF backs bill on higher softdrinks taxes

MANILA, Philippines - The Department of Finance (DOF) is backing a bill that seeks to impose higher taxes on carbonated drinks as the government stands to generate as much as P10.5 billion in additional revenues.

Nueva Ecija Rep. Estrellita Suangsing filed last December  House Bill 3365 that would impose a 10 percent ad valorem tax on softdrinks and carbonated beverages sold in bottles and other tight containers.

“The proposal did not emanate from us.  DOF supports this congressional initiative,” Finance Undersecretary Jeremias Paul said.

Paul, however, said details of the proposed measure have yet to be “fine-tuned.”

The softdrink industry is currently subjected to income tax, value added tax, withholding tax, local and real property taxes, and customs duties.

Flavored and colored syrups used in the manufacture of softdrinks, on the other hand, are only subject to the 12 percent VAT and customs duties.

Suansing said the additional revenues that will be raised from this tax measure would benefit those provinces severely damaged by a series of powerful typhoons last year.

The bill specifically states that the funds to be collected from the imposition of the ad valorem tax would go to a rehabilitation fund for calamity victims and well as programs on livelihood development, mass housing and  infrastructure.

Apart from the additional revenues it would provide the government, the measure is also seen to reduce consumption of softdrinks as beverage makers jack up their  prices in an effort to sustain earnings.  Soda makers will most likely pass on the tax cost to consumers.

Suansing noted that other countries like France, Netherlands, Finland and the US are imposing higher taxes  on sodas.

During the Congressional hearing early this week, Coca-Cola Philippines vice-president for public affairs Adel Tamano said he sees the  proposed  measure curbing the sales volume of the softdrink industry.

Higher taxes on heavily sweetened drinks are part of the government’s campaign to promote healthy living.