Beverage giants buck proposed tax on sugar, syrup for pop soda

Beverage giants such as Asia Brewery Inc., Coca-Cola Bottlers Philippines, Inc. and the San Miguel Brewing Group are opposing proposals in Congress seeking to impose an excise tax on sugar or syrup used on carbonated drinks.

The companies and other members of the 15-member Beverage Industry Association of the Philippines (BIAP) claim that taxes on sugar used on carbonated drinks would be detrimental to the economy.

Quezon Rep. Danilo Suarez has filed House Bill 595 which proposes to tax syrup used on soft drinks. The bill proposes a 10-percent value-added tax on flavored or colored syrups used for soft drinks.

However, in a position paper submitted to Congress, the BIAP said the proposed taxes would have a negative impact on the economy and would outweigh whatever positive gains may be derived from it.

“It poses a grave threat to the sugar industry and other allied industries,” the BIAP said.

Aside from Asia Brewery, Coca-Cola and San Miguel, the association also includes Pepsi Cola Products Philippines, Inc., Zesto Corp. and Del Monte Philippines, Inc.

The group said over one million families whose livelihoods are dependent on sari-sari stories are at risk of seeing these livelihoods negatively affected by taxes on syrups used in carbonated beverages.

Furthermore, the beverage industry group said the proposal to tax sugar is discriminatory.

“Flavored syrups are used in all beverages except fruit juices and to select only those used for carbonated beverages is discriminatory,” it said in its position paper.

The group said the tax will not generate the expected revenues and would cripple the beverage industry that continues to provide employment and economic opportunity to millions of Filipinos.

The Department of Finance (DOF) favors imposing an excise tax on soft drinks and other carbonated drinks instead of imposing a tax on sugar or syrup used on these drinks. The department said proposals to impose a tax on sugar or syrup used on soft drinks and other carbonated drinks would work better if the tax would be imposed on the finished products and not just on the input.

“If you have to tax, it’s better if you tax directly the output and not the input..If the objective is to regulate and discourage consumption of soft drinks, then the Finance department might consider proposals imposing excise tax on soft drinks itself,” the department said in its position paper.

Under this proposal, a 10-percent ad valorem tax on flavored or colored syrups exclusively used in manufacturing soft drinks would be imposed on the manufacturer.

The tax base would include tariff and customs duties and all other charges, net of value-added tax (VAT), the lawmaker said.