Tax take on sweetened drinks pegged at P34B/yr

The government will generate between P25 billion and P34 billion in additional revenues a year if the measure aimed at slapping higher taxes on soft drinks and other sweetened beverages becomes law.

Based on the Department of Finance’s (DOF) computations, prices of powdered juice drinks will double once the additional excise tax of P10 a liter proposed under the substitute bill for House Bill No. 3365, which the House ways and means committee approved on Tuesday, is implemented.

According to committee chair and Marikina Rep. Miro Quimbo, the DOF had computed an up to P34-billion windfall in additional revenue coming from the health measure.

The substitute bill to HB 3365 authored by Nueva Ecija Rep. Estrellita Suansing eyes to amend the tax rate on sugar-sweetened beverages under the Tax Code by imposing an excise tax of P10 per liter.

Also, the tax rate will be hiked by 4 percent every year thereafter.

Proposed to be slapped the additional tax are soft drinks, fruit drinks, sports drinks, sweetened tea and coffee drinks, energy drinks, and all other non-alcoholic beverages that are ready-to-drink and in powder form.

DOF computations showed that the retail prices of various brands of powdered juices would jump by 101-140 percent when slapped with the additional excise tax on top of the value-added tax or VAT.

For instance, a sachet of an orange juice brand, which when mixed with water will yield a liter of juice, will see its retail price increase from the current P9 per sachet to about P20, according to the DOF.

Soft drink prices, meanwhile, will rise by 16-36 percent, depending on the brand and volume.

The prices of liquid fruit drinks, punches and ades will go up by 12-48 percent; those of energy and sports drinks by 15-18 percent; and prices of sweetened coffee and tea by 2-28 percent.

On the other hand, products that will not be covered by the added tax include natural fruit juices, natural vegetable juices, yogurt, milk products, meal replacement beverages or medical food, as well as weight loss products.

Last Tuesday, the Beverage Industry Association of the Philippines (BIAP) reiterated its opposition to HB 3365, which it claimed was “anti-poor and anti-business.”

“This additional tax on basic goods and products commonly purchased by the majority of Filipinos, particularly those in the lower socio-economic classes, will make items like coffee, juice and soft drinks more expensive for ordinary consumers,” BIAP explained.

In contrast, BIAP noted that HB 3365 exempted products that were “typically positioned in the premium market and consumed by more affluent consumers.”

“Wealthy Filipinos who can afford pure beverages will be spared from the tax on sweetened beverages. In addition, crafted drinks such as those sold in coffee or tea shops, which are similarly sweetened or have sugar, will not be taxed a single centavo,” BIAP said.