Snacks firm proposes fix on sugar tax impasse

Snacks maker Mondelez Philippines, Inc. (MPI) would only support the proposed excise tax on sugar-sweetened beverages (SSBs) if it would be based on the product’s sugar content.

According to Shanahan Chua, MPI head of corporate and government affairs, the sugar content basis would have a more “proportionate impact” on the different beverages. MPI currently accounts for about half of the market share in the local powdered drink market.

The first package of the comprehensive tax reform program currently being pushed in Congress suggests a levy based on drink volume: P10 a liter for SSBs using local sugar and P20 for those using imported sugar.

In the case of MPI, the P20 excise tax would bring the price of a 25-milligram sachet of its popular powdered drink brand Tang to about P30 (also including the value added tax for sari-sari stores).

“If they really do need to do the tax now, what we are looking at as an industry is to echo what Sen. [Sonny] Angara was saying and really look at sugar content instead of literage. If we’re looking about reducing consumption, sugar content would be fairer instead of that volume metric,” Chua told reporters on Thursday.

“If Tang costs around P30, then nobody might drink it anymore, then you get nothing. You want to make Tang grow and still get a revenue … There are certainly reasonable numbers that are being discussed,” he added.

MPI is part of the Beverage Industry Association of the Philippines (BIAP), which has already raised their reservations regarding the sugar tax.

In response to these reservations among different stakeholders, the Department of Finance is proposing to remove the SSB tax only if the Senate would pass the first package in its original form. The tax was included in the House of Representatives version in exchange for other provisions it struck down.

MPI country head Ashish Pisharodi said the local industry was worth $250 million in terms of sales, and around half of that is accounted for by Tang.

“We want to have constructive talks. We feel the tax is premature in the sense that not enough discussion and dialogue has happened,” he said.