A GROUP of beverage manufacturers vehemently opposed a proposed measure which seeks to impose an additional levy on carbonated and sweetened drink products, saying it would negatively impact the industry.
Members of the Beverage Industry Association of the Philippines (BIAP) denounced House Bill (HB) 3365, which seeks to amend the Tax Code by imposing a 10% ad valorem tax on carbonated drinks, on top of the regular 12% value-added tax (VAT) on the sale of goods.
“We as an industry view it as an undue form of discrimination,” lawyer Adel A. Tamano of the BIAP told BusinessWorld at the sidelines of a briefing at the House of Representatives yesterday.
The proposed measure, sponsored by Rep. Estrellita B. Suansing (Nueva Ecija, 1st district), seeks to collect additional taxes to discourage the consumption of carbonated drinks, claiming that these beverages pose a number of health risks, including obesity, heart disease, and diabetes.
A nutrition expert, meanwhile, contested this claim, saying that obesity and other health risks are not brought about by softdrinks alone; rather, it is caused by an entirely unhealthy lifestyle.
“It is discriminatory because it claims that essentially, obesity is caused by a specific food or beverage, which is really not the case. If the real purpose is to address obesity, then you cannot do so by making one food or beverage alone more expensive,” Mr. Tamano said.
Once passed, the proposed tax on soda products can generate at least P10.77 billion, according to initial data from the Bureau of Internal Revenue (BIR).
The amount is based on gross sales of top beverage companies for 2013 alone, and does not include sales from smaller beverage producers, according to BIR lawyer Euvimil Nina R. Asuncion.
Meanwhile, data from the National Tax Research Center show an P8.3-billion increase in taxes levied from soft drinks, according to Rep. Romero “Miro” S. Quimbo (Marikina, 2nd district), chairman of the House committee on ways and means.
Finance Assistant Secretary Soledad Emilia J. Cruz, meanwhile, suggested that an excise tax should instead be imposed on carbonated drinks, with the increments pegged at a fixed amount per product volume.
The BIAP is composed of 18 beverage companies, including bottling giants Coca-Cola Bottlers Philippines, Inc., Pepsi-Cola Products Philippines, Inc., and San Miguel Corp. Mr. Tamano said that the industry has contributed P46 billion to the economy since July 2010.
Mr. Tamano said imposing taxes would not mean increased revenues; rather, it would decrease company profits and therefore cut down corporate taxes remitted by businesses each year.
The proposed tax, he added, would affect 1.2 million micro-entrepreneurs and more than 25,000 workers.
“We are model corporate citizens, and to impose tax on softdrinks and carbonated drinks at this critical hour, we say most respectfully that it is unwise, unfair, and is sending a clear negative signal to foreign and local corporations and will discourage investments to this country,” said Mr. Tamano.
For its part, the Department of Health threw its full support for the bill, saying that the added tax could push Filipinos to veer away from unhealthy lifestyles.
Economist Cielo D. Magno added that based on global trends, a tax increase is likely to result to an 8% decline in soda consumption.
According to the proposed bill, revenues from the new tax will be used as a rehabilitation fund for victims of natural calamities.
However, Mr. Quimbo said the committee is open to amending the purpose of the fund, possibly for consumer education initiatives.
The bill is pending at the House committee on ways and means.
