In a recent hearing, Sen. Ralph Recto, chairman of the ways and means committee, said the Tax Reform Act of 1997 already exempted raw cane sugar in the payment of VAT, but the BIR continued to impose the tax when it issued Regulation 29-2002.
Instead of subjecting raw cane sugar and other sugar products to the VAT, Recto urged the BIR to intensify its efforts to collect VAT on refined sugar.
Industry representatives have complained that BIR Regulation 29-2002 included raw sugar in the definition of refined sugar by expanding it to include other types of raw sugar, in effect subjecting the raw sugar to VAT, which is inconsistent with the Tax Code.
Furthermore, Recto pointed out to Finance Undersecretary Grace Pulido Tan that government should accord local sugar planters the same treatment it gives to foreign banks which it wants to provide with incentives such as tax exemptions.
Sugar Regulatory Administration (SRA) head James Ledesma stressed that subjecting raw sugar to VAT unduly increases its price, making it more expensive to the poor consumers.
"Around 30 percent of the total production of sugar is sold as raw for direct consumption and is being bought by low income consumers in the wet markets," he said.
The local sugar industry is enjoying a resurgence and for the first time in 12 years, will have surplus production, enough to meet domestic requirements and its annual sugar quota to the United States.
The world export market is being looked at by the sugar industry to prevent domestic prices of sugar from sliding.