Diokno: Liberalization ‘reasonable compromise’ for proposed higher tax on sweetened drinks

Finance Secretary Benjamin Diokno sees liberalizing or allowing manufacturers of sweetened beverages to directly import their sugar or sweetener requirements as a “reasonable compromise” for the government’s plan to increase duties and broaden the tax base for sweetened beverages.

The Department of Finance is planning to increase the beverage tax rate under the Tax Reform for Acceleration and Inclusion (TRAIN) Law to P12 per liter, regardless of the type of sweetener used, remove exemptions, and index the rate by 4% yearly.

“We will make it uniform. I think administratively, that's also good to simplify,” Diokno said in his weekly press chat.

Currently, the TRAIN law mandates a P6-per-liter excise tax on beverages using caloric and non-caloric sweeteners, and P12 per-liter tax on beverages using high-fructose corn syrup.

“We will broaden the base,” the Finance chief said, noting that exemptions will be eliminated.

Milk, flavored milk drinks, three-in-one coffee mixes are among those exempted from the sweetened beverage tax.

With higher tax rate and broader base, Diokno said, “To me, a reasonable compromise is… okay tax namin kayo, pero we will allow you to import your sugar.”

The Finance chief said manufacturers cannot freely import sugar.

Under the current system, the Sugar Regulatory Administration (SRA) regulates the importation of sugar and determines the volume to be imported after assessing the local industry’s capability to satisfy the country’s consumption demands.

In liberalizing sugar trade, Diokno said, “Ang model ko diyan is the RTL (Rice Tariffication Law).”

The RTL, pushed by the previous administration, removed the quantitative restrictions on rice importation allowing the unhampered importation of rice as long as private sector traders secured a phytosanitary permit from the Bureau of Plant Industry and pay the 35% tariff for shipments from neighbors in Southeast Asia.

Diokno, however, said that new legislation is not needed to liberalize sugar trade.

“Kahit just a policy that you will be allowed to import sugar, okay na ‘yun,” he said, adding that industrial users or manufacturers were previously allowed to directly import their sugar requirements.

The Development Budget Coordination Committee (DBCC) is expecting P53.7 billion in additional revenues from the higher excise tax on sweetened beverages.

Meanwhile, both the junk food and sweetened beverage tax packages are expected to generate an additional P76 billion in revenues during the first year of implementation. —KG, GMA Integrated News