DTI chief backs beverage industry

Trade and Industry Secretary Ramon M. Lopez backs beverage manufacturers in tweaking the government’s tax reform bill to temper the proposed excise tax on sugar-sweetened products.

Lopez told reporters last week that he wanted the Senate version of House Bill (HB) 5636 to undergo some “fine-tuning” after beverage makers raised concerns that the bill would substantially jack up their costs and the prices of their products.

HB 5636, which serves as the first package of the administration’s comprehensive tax reform program, includes a section that would impose an excise tax of P10 per liter of sugar-sweetened beverages, spiking the prices of soft drinks, carbonated drinks and coffee beverages, among others.

Instead of an excise tax based on volume capacity, Lopez said he supported the call of beverage makers to base the tax computation on the sugar content of the products.

This would mean a “lower, but broader” excise tax base since this would involve all products with sugar content, and not just beverages.

“Based on the comments [of beverage makers], they propose to index the tax to the sugar content. For the (Department of Trade and Industry, that’s not a problem since there would still be revenue generation,” Lopez said in Filipino.
Lopez said the beverage industry was planning to submit this proposal to the Senate.

Some manufacturers and consumer industry groups, including the Beverage Industry Association of the Philippines (BIAP), have voiced their opposition to the bill, warning this would hit consumers the most.
Lopez, a former top official of food and beverage company RFM Corp., did not say which industry group approached him for his support.

The bill, which was passed in the House of Representatives last week before Congress adjourned, seeks to offset the revenue losses arising from the lowering of personal income tax by charging new or higher rates on consumption.

The automobile and the business process outsourcing industries would both be affected by the higher taxes.

While the groups representing these industries wanted either status quo or at least lower rates, Lopez said he would no longer support these positions to lessen the hurdles of the bill in Congress.