Excise tax on sweetened beverages to hit poor 'hardest' – food chamber

The proposed P10 per liter excise tax on sugar sweetened beverages (SSB) will be the highest in the world and will hit low-income consumers the hardest, the Philippine Chamber of Food Manufacturers Inc. (PCFMI) claimed on Wednesday.

House Bill 292, a measure seeking to impose excise tax on sugar sweetened beverages, has been incorporated into HB 5636 or the Reform for Acceleration and Inclusion (TRAIN) Act.

The chamber represents major food and beverage manufacturers in the country, and whose members employ an estimated work force of 700,000.

"The proposed Philippine SSB excise tax amounting to P10 per liter is disproportionately high compared to those in other countries with similar taxes," the chamber said.

"The Department of Finance considers the Mexican tax model as best practice in sugar taxation," it added.

However, the PCFMI noted that "ironically' the Mexican tax model only impacts on prices of sugar sweetened beverages by a maximum of 10 percent.

"In contrast, the HB 292 model will increase the prices of the common Filipino’s basic drinks from 35 percent to a high of 111 percent. In Philippine pesos, the sugar sweetened beverage tax in Mexico is only P2.50 per liter compared to the proposed local tax of P10 per liter," the group emphasized.

The proposed tax is heavily skewed towards the lower income earners, according to PCFMI, citing a 2016 research by AC Nielsen which showed the consumption of coffee mixes, powdered concentrates and soft drinks.

"The biggest numbers of consumers of these three major categories of beverages are in the DE or lower-income categories:  87 percent for coffee, 86 percent for powdered concentrates and 79 percent for soft drinks," it said.

"Therefore, it is not correct to say that the rich will be the ones affected by the tax," it said.

The current minimum wage for non-agricultural workers in the National Capital region is P491 per day, which places minimum wage earners in the DE categories. Under current laws, minimum wage earners are already exempt from paying income tax, the group said

"Assuming a minimum wage earner drinks one 200 ml cup of instant coffee mix per day, with the SSB tax, the amount added would be P2.00 per cup. This translates to P730.00 annually as an additional expense for the minimum wage earner, representing 1.5 days’ wages in the form of a new tax," the group said.

"This scenario means that a worker who buys a 3-in-1 sachet in the carinderia for his morning coffee will pay the SSB tax, while a person who goes to Starbucks or other coffee shops will not pay for it," it said. — Ted Cordero/VDS, GMA News