By George S. Chua
As President of the Federation of Philippine Industries, one of our members, the Beverage Industry Association of the Philippines (BIAP) sent me their position paper on the proposed House Bill No. 292 known as the Sweetened Beverage Tax. Essentially, with the tax reform program of the new administration, the plan is to lower certain taxes such as the personal income tax while looking for sources of revenue to make up for the difference. One of the proposals to recover lost revenues is to levy an additional tax on all sweetened beverages such as energy drinks, juices, carbonated drinks, coffee, tea and other pow-dered concentrates.
Intuitively, it might seem that it should be alright to tax more these types of beverages because we all know that sugar and other sweetened drinks are not good for your health and is the root cause of obesity, diabetes and other health issues. Additionally the companies that will be paying for the additional taxes, can afford it since they are large multinational companies such Pepsi, Coca-Cola, Nestlé, Kopiko, Del Monte or large domestic corporations like San Miguel Corporation, Universal Robina Corporation, Asia Brewery and so on.
I was quite surprised to find out there were many misconceptions that I had about the evils of sugar or sweeteners that made it seem alright to tax these products. First is that in spite of the declining sugar consumption there is an increasing rate of Filipinos being over-weight/obese and the rise of diabetes! At first I was skeptical and thought that this must have been a study done by the beverage companies. This was based on the 8th National Nutrition Survey by the Food and Nutrition Research Institute, conducted from June 2013 to April 2014 and covering 172,323 individuals from 45,047 households nationwide.
Doing a little check on who is behind the Food and Nutrition Research Institute, we find that it is the principal research arm of the government in food and nutrition and is one of the research and development institutes of the Department of Science and Technology (DOST). Perhaps sugar is not the primary cause of obesity and diabetes, perhaps a sedentary lifestyle and the lack of exercise is the culprit.
My second misconception was that the Sweetened Beverage Tax would only affect the middle class and the rich who could afford to pay more for these types of products. In a study conducted by the University of Asia and the Pacific (UA&P) on the macroeconomic effects of the House Bill 292, it was shown that the prices of consumer beverages will in-crease up to more than 100%. In particular, the share of liquid concentrates, powdered concentrates, and ready-to-drink juice will be affected the most by the sweetened beverage tax.
The latest Family and Income and Expenditure Survey of the Philippine Statistics Authority shows that close to 40% of the income of the average Filipino family are spent on food and non-alcoholic beverages. A clear indication that the lower income families will be most af-fected by this tax. Supporting this information is the AC Nielsen Retail Establishment Sur-vey conducted in 2004, which showed that there were over 1.3 million micro-entrepreneurs operating sari-sari stores in the country representing 91% of the retail stores universe in the Philippines. These sari-sari stores contribute 36% of the sales of Fast-Moving Consumer Goods which includes sweetened beverages.
It would be best to correct our misconceptions about sugars and sweeteners and come up with legislation based on reality rather than perception. One thing for sure is sugar is sweet, but we have known that all along.
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