SMC, ABI join forces against unitary tax proposal

MANILA, Philippines–Alarmed by the impending massive loss of jobs in the industry and livelihood of store owners nationwide, the country’s two beer manufacturers, San Miguel Brewery, Inc. and Asia Brewery, Inc., have joined hands for the first time to oppose the planned imposition of a single tax on all beer products including the excessive increase in the tax rate.

In a statement emailed to media companies, the two beer manufacturers stressed they are not against an increase in specific taxes as they recognize government’s need to raise revenues. However, the new scheme being proposed – the unitary or single tax system – is destructive and not the way to go, the statement read.

The two beer firms also lamented the excessive increase in the tax rates which threaten the viability of their products.

“The current three-tiered specific tax structure under Republic Act 9334 which provides for rate increase of 8 percent every two years has been effective in promoting both volumes and tax revenue collection growth from the beer industry,” San Miguel and ABI said.

Modest growth

They said from 2004 to 2011, excise tax collection from the beer industry increased by 43 percent since RA 9334 was implemented in spite of modest industry volume growth during the same period.

The single tax scheme is further worsened by the high jump in the new tax rates being proposed.

Under the Department of Finance-backed House Bill 5727 proposing the single tax scheme, a uniform tax rate of P25 per liter for all beer products shall be imposed regardless of whether they are currently classified as low-priced, medium-priced or high-priced.

Thus, the low-priced beer, which has a current tax of P10.41 per liter, will have to be taxed P25 per liter or a 140 percent increase once the measure is enacted into law.

These low-priced beer products are sold in sari-sari, or small, stores nationwide which generate modest income from their sale and are consumed by the poor and low-income consumers.

Anti-poor

“HB 5727 is anti-poor since it not only makes affordable and healthy beer products out of their reach but it will also have a profound impact on the honest livelihoods of hundreds of thousands of low income families running these small stores,” San Miguel and ABI said.

The two manufacturers fear that since these beer products will no longer be within reach of poor consumers, which comprise the majority beer market, they will shift to hard liquor and very possibly, unregulated liquor products.

Even the medium-priced beer, which is currently being taxed P15.49 per liter, will experience a 61 percent jump, which is considered stiff and an unreasonable hike.

The high-priced beer products, which are mostly imported, are currently taxed P20.57 per liter and will experience only a 21 percent tax rate increase.

Destructive impact

The two manufacturers are concerned about the destructive impact of the bill to the industry, specially its viability, its associated industries, the workers, and small and micro store owners.
“The livelihood of 8,000 workers directly associated with beer production and sales and tens of thousands more involved in the distribution of beer products to retail outlets will be adversely affected,” they said.
They pointed out that the measure will also “negatively affect the livelihood of more than 500,000 sari-sari stores nationwide where beer is a major consumer item.”
“We believe that the imposition of a unitary tax system at the excessive rate proposed by RA 5727 will have a disastrous impact on an industry where so many depend on for livelihood and in turn negatively affect the government’s efforts to raise revenue,” the two companies said.

“It is our firm conviction that retaining the proven three-tiered structure for specific taxes with provisions for inflation adjustments will provide a win-win solution for the government and the industry,” they stressed.