July 19, 2018, 4:12 am
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Sugar tax to hurt poor: FPI

The Federation of Philippine Industries (FPI) has opposed any moves to slap excise taxes on sugar-sweetened beverages (SSBs) saying this would hurt the poor.

Jesus Arranza, FPI chairman, said the insertion of this planned tax in the first package of the Comprehensive Tax Reform Program also known as the Tax Reform for Acceleration and Inclusion Act came as a surprise to the group as it was not included in the original Department of Finance proposal. SSBs shall be slapped with P10 tax per liter.

Nevertheless, the FPI, in support of one of its members, the Beverage Industry Association of the Philippines, has openly criticized the proposal saying this would be another burden to both manufacturers and consumers.

The proposal would cover sport drinks, sweetened tea, coffee drinks, energy drinks and softdrinks which Arranza described as energy boosting drinks that ordinary Filipinos can afford.

But Arranza said the bill does not cover the expensive coffee mixes in coffee shops as well as baked goods which are mostly patronized by the more affluent.

“There are already many taxes that are unduly burdening the local manufacturing industries, when the supposed needed government revenues could be raised by merely correcting the revenue leakage brought about by smuggling where the government is losing about P200 billion annually,” Arranza said.

He said while the FPI understands the noble intention of the proposal which is basically to raise funds and curb consumption of softdrinks and carbonated drinks, the proposal’s focus on SSBs runs contrary to fundamental studies on obesity which had characterized the latter as a complex phenomenon that cannot be blamed on a single factor or product.

“If the spirit of the Constitution must be followed, we must then uniformly impose a heavier tax on all commodities that contribute to the rise in obesity,” Arranza said.

FPI is also concerned about the broader impact of this policy on the economy.

“It is reasonable to expect that the proposed tax will unnecessarily add to inflationary pressure and consequently raise prices of other consumer goods,” the FPI said.

Over the long term, the group added, the tax may also dampen investor confidence.

“The P5 billion to P10 billion that is expected to be generated from the tax scarcely seems worth the damage to the country’s macroeconomy,” the group added.

When asked if the group would support a tax on sugar as raw material and not on the finished product, Arranza said “that would result to smuggling” due to the prohibitive cost which would ultimately hurt sugar farmers.

As it stands the SSB tax “will definitely reduce the consumption of sugar thereby gravely affecting the livelihood of the already struggling sugar farmers, worker, planters and the sugar millers,” he added.
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