Trade group: Health issues won’t go away with added tax on sodas

MANILA, Philippines–Manufacturers are opposing additional tax on soft drinks, saying it will not solve any health problems and may even threaten jobs in the sector.

“Taxation will not solve the problem of obesity and other related health issues, and taxing food and drink will have a negative impact on the Philippine economy,” the Beverage Industry Association of the Philippines (Biap) said in a statement.

The Lower House has started to tackle House Bill (HB) No. 3365, authored by Rep. Estrellita B. Suansing of Nueva Ecija, which proposes to slap a 10-percent ad valorem tax on sodas and other carbonated drinks sold in bottle and other tight containers. Soft drinks are already subject to value-added tax.

Department of Finance officials last week said they would back moves to slap any additional tax on soft drinks.

The new tax on soft drinks is expected to add about P5 billion to the government’s coffers yearly and curb the consumption of sugary drinks, which has been said to lead to health problems such as diabetes and obesity.

But for Biap, taxation “is the wrong policy tool to address obesity and other related health issues… There is no scientific evidence which shows a direct correlation between soft drink consumption and obesity rates.”

The industry group cited a Food and Nutrition Research Institute study released in 2008, which showed that calories from sugar and syrup comprise a mere 1.9 percent of Filipino’s daily food intake.

“To discriminate against soft drinks and carbonated drinks without considering other food and beverages is unfair,” Biap said.

On concerns of health, Biap said its members produce “safe, quality products.”

Also, local soft drinks manufacturers warned that slapping a higher tax on the product would “imperil the jobs and livelihood of millions of Filipinos … throughout the extensive value chain of the beverage industry.”

The domestic beverage manufacturing industry, Biap said, employs over 25,000 on top of thousands of others who are employed by retailers, as well as logistics providers and truckers. More than 1.2 million microenterprises nationwide also sell soft drinks.

To date, industry players have poured over P46 billion in investments, Biap added.

“The proposed tax will both fail to produce additional revenue for the government and will discourage much needed local and foreign investment in the beverage sector,” Biap said.

The group also noted that additional taxes would bring about higher prices, which could also impact on consumers.

“When businesses are targeted for higher taxation, the prices of goods sold in the market are also affected. Imposition of taxes usually affects prices of products. With prices going up, market size is also affected. A decline in market size, in most instances, also leads to a slowdown in economic activity,” Biap said.

Biap counts 18 members, including Asiawide Refreshments Corp., Asia Brewery Inc., Coca-Cola Bottlers Philippines Inc., Mondelez Philippines Inc., Pepsi-Cola Products Philippines Inc., Universal Robina Corp., Philippine Sugar Millers Association Inc. and San Miguel Corp.