MANILA, Philippines — Filipinos, especially the working class, have long called for a tax system that is fair and simple.
There is now hope as the House of Representative has approved on third and final reading House Bill 5636, or the Tax Reform for Acceleration and Inclusion (TRAIN). Once passed as law, it will be the first to be implemented from the Duterte administration’s tax reform agenda.
But while TRAIN is promising in its plan to lower personal income tax and increase value added tax, one of its proposed excise tax inclusions could be alarming. This is true with House Bill 292, or the Sugar Sweetened Beverage (SSB) Tax, which directly impacts Filipino consumers and retailers.
Here are five questions that you need to ask to be informed.
1. What is the tax really about?
Through TRAIN, the bill taxing sweet beverages will be added as a new section (150-A) in the National Internal Revenue Code of 1997. According to the updated bill, it will impose an excise tax of P10 on beverages sweetened with locally produced sugar and P20 on other sugar sweetened beverages per liter of volume capacity.
But what exactly is a “sugar sweetened beverage”? The bill says that SSBs are sweetened and non-alcoholic beverages in liquid, solid or concentrate forms that are pre-packaged and -sealed by manufacturers like sachets of 3-in-1 coffee and flavored juice drink. These beverages also use any form of sweetener—may it be caloric (refined sugar, high fructose corn syrup, etc.) and/or low- to non-caloric. Also considered as SSBs are carbonated drinks, flavored water, energy drinks, sports drink, other powdered drinks, cereal and grain beverages, and all other non-alcoholic beverages that contain sugar.
The provision, meanwhile, does not cover all milk products, 100-percent natural fruit and vegetable juices, meal replacements, and even beverages that are sweetened or concocted inside a store like coffee and juice shops.
The bill is seen as a way to fight diabetes and obesity among Filipinos by curbing their sugar consumption.
2. Do we really need a tax on these drinks?
If basing alone on its aim to promote healthier lifestyle, the SSB tax is worth taking a second look at.
First, local and international studies report that Filipinos are not over-consuming sweetened beverages. In fact, the recent 43rd FNRI Seminar Series revealed that in a Filipino’s daily fluid intake, only 7.8 percent goes to coffee and tea, 6.5 percent to soft drinks, and less than 5 percent to juice and energy drinks.
The series, held from July 5 to 7 at the Crowne Plaza Manila, also reported that classes C, D and E or from middle class to the poorest consume lesser sugary beverages—and more water actually—than classes A and B or the wealthier segment of the population. The data is based on the “8th National Nutrition Survey: Fluid Intake of Filipinos” conducted in 2013.
In its 2014 National Nutrition Survey, the FNRI discovered that the Filipino diet consumes only 1.9 percent sugar and syrup in contrast to 41.9 percent cereal food products like rice.
Sugar consumption also declined since 2003 but obesity and diabetes remained prevalent. This suggests that other food groups are causing said diseases.
Moreover, despite the fact that poor Filipinos consume more SSBs, they are least affected by obesity and diabetes. The rich and richest, who might simply shrug off the additional cost of sugary beverage, have the highest cases of the diseases, according to FNRI.
Statistics gathered by World Health Organization in 2015, meanwhile, ranked the Philippines 155 out of 192 countries in the World Obesity Index—far lower than its Asian neighbors and Western countries.
3. Who will be affected?
According to a survey by the Department of Finance, the proposed tax may increase prices of sugar sweetened beverage from as low as 2 percent to as high as 200 percent. Infographic below shows how prices of the SSBs may increase when taxed.
The SSB tax, therefore, will have an impact on majority of Filipinos who are low-, minimum- or above minimum-income earners.
Besides the consumers, micro-retailers in the country—in the form of sari-sari stores and carinderias—will also be affected.
AC Nielsen data tells that there are already 1.3 million sari-sari store owners in the country, and 40 percent of store sales come from beverages.
Vicky Aguinaldo, president of Philippine Association of Stores and Carinderia Owners, attests to this. In a public statement addressed to senators, she said, “Bilang nagmamay-ari ng mga sari-sari stores at carinderia, hindi lang kami tumatangkilik sa mga produktong ito; kami din ay nagbebenta. Sa pagtaas ng presyo ng mga SSBs ng hanggang 50 percent, inaasahan naming bababa din ng husto ang aming kinikita. Sa ngayon, halos 30 percent ng aming kita ay nagmumula sa pagbebenta ng SSBs. Alam po namin ito dahil personal po naming minonitor ang aming benta sa bawat araw kung kaya’t napatunayan po namin na malaking bahagi ng aming kinikita ay galing sa SSB.”
Aguinaldo and fellow Filipina retailers are part of smaller associations and cooperatives in their communities before coming together to form PASCO. Today, their association has already 6,000 MSME members.
4. Why should you care?
The promise of TRAIN is a broad and fair tax system for Filipinos but SSB tax seems to achieve otherwise, insists PASCO.
“Para sa amin, ang panukalang batas na ito ay hindi makatarungan sapagkat lalo pa itong magpapahirap sa mga maralitang tumatangkilik ng mga produktong ito. Hindi po namin maintindihan kung bakit ang mga kapus-palad pa ang gustong dagdagan ng bagong buwis ng gobyerno,”said Aguinaldo.
She added, “Paano na lang ang kabuhayan namin kapag may dagdag buwis na ang mga ito? Nangangamba kami na tuluyan nang mawawalan ng kabuhayan ang higit sa 1.3 million na micro-entrepreneurs na nagmamay-ari ng sari-sari stores sa buong bansa.”
According to the “2016 University of Asia and the Pacific Economic Impact Study,” beverage producers believe that P20 billion will be lost in SSB sales annually.
Related industries, meanwhile, will also suffer a P51-billion loss. About 133,750 direct and indirect jobs will be affected resulting in a 1.5-percent increase in unemployment rate. Total economy-wide loss is projected at P63 billion net.
5. How can you do your part?
While talks on the SSB Tax between micro-entrepreneurs, affected industries and members of the Congress continue, you can already do your part.
You can also show solidarity with the Filipino people in opposing the SSB Tax. Sign PASCO’s online petition here.
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