Softdrinks Tax at 10%: A Sweet or Sour Disposition?


Softdrinks Tax

Softdrinks Tax

is now on the table and is likely to materialize. Department of Health (DOH) and Department of Finance (DOF) both recently expressed support for this proposed bill. Well this is because of two anticipated rationales aligned with DOH’s and DOF’s purpose.

Softdrinks Tax

Harmful Effects of Softdrinks

Softdrinks Tax is said to increase government revenue and at the same time promote good health.

According to a projection made by DOF, Softdrinks Tax will spike up government earnings at around P10 billion. On the other hand, since imposing additional tax is parallel to price increase, DOH expects Softdrinks Tax will decrease softdrinks consumption. In DOH daily stats, there are 44 deaths due to diabetes –blaming it to the high calorie content of softdrinks.

Will Softdrinks Tax open happiness? Let’s find out.

Softdrinks Tax: A Sweet Disposition

After cigarettes and liquors were subjected to the “Sin Tax” (REPUBLIC ACT NO. 10351), softdrinks and other artificial beverages are now on the watch for an ad valorem tax or in layman’s term- additional VAT (Value Added Tax) via the Softdrinks Tax. This proposal can be rooted from the bill authored  by Rep. Estrellita Suansing of Nueva Ecija last Dec. 2013.

Softdrinks tax

Rep. Estrellita Suansing of Nueva Ecija

According to the proposed Softdrinks Tax bill, “an additional 10 % VAT will be imposed on softdrinks and carbonated beverages sold in bottles and other tight containers”. Revenue from Softdrinks Tax will benefit calamity victims. Proceeds will be utilized for programs such as infrastructure, housing and livelihood for rehabilitation.

 

Rep. Estrellita Suansing also stressed that the Philippines should not be naive to Softdrinks Tax, because other countries like USA, France, Netherlands and Finland have implemented Softdrinks Tax.

Softdrinks Tax: Goes Sour

Softdrinks TaxIf Softdrinks Tax is a win-win situation for the Philippine government, softdrinks industry frowns on the tanginess of the proposed Softdrinks Tax. Basically because additional 10%  VAT  will be an added ball and chain for their manufacturing costs. Not to mention the value added tax, income tax, withholding tax, local and real property taxes, and customs duties these companies are currently stricken with.

Softdrink Tax

Adel Tamano

Adel Tamano, VP for public affairs and communications of Coca Cola Philippines Inc., who also represented the Beverage Industry Association of the Philippines in the Softdrinks Tax hearing, was skeptic on the advantages of Softdrinks Tax. In an interview Tamano said “There are many ways to provide employment and income, not only through taxes. In the Philippines, in terms of percentage, where do most Filipinos get their calories? It’s not from soft drinks. It accounts for less than 10 percent of the caloric intake. It’s from rice. If the issue here is caloric intake, don’t look at soft drinks”.

Most importantly, Tamano highlighted on how the effect of Softdrinks Tax will be passed on to retailers down to consumers, who have no choice but carry the can.