Sunday, July 22, 2018
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Corporate Securities Info

Questionable warning labels

A double whammy appears to be in the offing for the country’s beverage industry.

At the start of the year, the Tax Reform for Acceleration and Inclusion (TRAIN) Law imposed excise taxes on sugar-sweetened beverages (SSB) to raise additional revenues for the government and to discourage consumption for health reasons.

As expected, the taxes raised the prices of sugary drinks and, in the process, adversely affected their sales.

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Taking a leaf from the health warning labels printed on cigarette packs, the government now plans to do something similar for sugary drinks. The labels will be in addition to the information about their contents that now appears on their packaging.

Beverage manufacturers and some business leaders have opposed the proposal because it will impose new burdens on the industry and give a negative impression about the products to the consumers.

They said that, unlike extensive medical findings about the correlation between cigarette smoking and cancer, no similar scientific research has been done for these drinks.

If the government decides to push through with this scheme, it can invoke its “police power” (or authority to regulate private activities to promote the public welfare) to justify its implementation.

It can claim that the excessive consumption of SSB is detrimental to our health because it can cause diabetes and other sugar-related illnesses. And any increase in such illnesses translates to higher hospital operation and maintenance costs for the government.

Central to the issue on the propriety of putting health warning labels is determining the nature of sugar. It is not a prohibited product nor has it been declared as harmful or inimical to health. In fact, nutritionists say sugar is needed by our bodies to meet our daily calorie and nutritional requirements.

If sugar were unfit for human consumption, then the planting of sugarcane in the country would have been banned and considered a criminal act. On the contrary, the government is encouraging the planting of more sugarcane for the export market.

Significantly, the Food and Drug Administration (FDA) has given clearance or license to many companies to manufacture and distribute food products that contain sugar and its derivatives, which include SSB, which shows that sugar is safe to eat or be used for other food products.

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Putting health warning labels would, in effect, constitute an indirect reversal of the FDA’s certification about the safety of sugary drinks. It would give the impression of two government offices working at cross or conflicting purposes.

This is not to promote the excessive use of sugary drinks, but as medical practitioners are often wont to say, moderation in the intake of any kind of food is the key to a healthy and long life.

If health reasons are cited to justify health warning labels for SSB, the same criterion, as a matter of fairness, should be applied to food products that use chemical preservatives, e.g., instant noodles and microwaveable dinners, to extend their shelf life.

Although chemical preservatives are not considered detrimental to health, medical studies show that their excessive ingestion can damage vital body organs or, worst, lead to cancer.

And what about fruits and vegetables imported from abroad that are widely believed to be sprayed with pesticides and other chemical substances to ward of insects and maintain their freshness? Shouldn’t their packaging also have warning labels? What is sauce for the gander should be sauce for the goose.

In other words, what may look like a limited application of health warning labels to SSB could have unintended consequences for other business activities if brought to its fair and logical conclusion.

The proponents of this labelling proposal should be reminded that the additional expense that would be incurred for putting the health warning label would eventually be passed on to the consumers.

Whether or not the objective of this warning label can be met is a big question mark. Perhaps, for senior citizens it would, but it is doubtful if the younger generation would take note of it at all.

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TAGS: Business, Tax Reform for Acceleration and Inclusion (TRAIN) law
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