Tan, Ang take opposite sides on beer tax issue

MANILA, Philippines -  Taipans Lucio Tan and Ramon Ang may be strategic partners in Philippine Airlines, the country’s flagship carrier, but they are at loggerheads over proposed tax measures on beer products filed at the Senate.

Tan’s Asia Brewery Inc. (ABI), the second largest beer company in the Philippines is crying foul over the provisions of pending sin tax measures at the Senate, saying that the proposals would not affect Ang’s San Miguel Corp. beer products the same way it would affect ABI’s alcoholic drinks.

In a position paper submitted to the Senate, Asia Brewery said that its Red Horse, Gold Eagle, Beer na Beer and Colt 45 would be slapped with a 107 percent to 140 percent increase in tax rates under the unitary tax rate proposal embodied in Senate Bills 2763 and 3249, respectively.

On the other hand, market leader San Miguel’s Pale Pilsen and San Mig Light would be slapped with only a 39 percent to 61 percent tax increase under Senate Bills 2763 and 3249, respectively.

Asia Brewery said that with this bias, its sales volumes “will be wiped out.”

Senate Bill 2763, authored by Senator Panfilo Lacson and Senate Bill 3249, authored by Senator Miriam Defensor-Santiago, both seek to restructure the excise tax system on alcohol and tobacco products.

The two measures are among the pending tax bills being discussed by the Senate House ways and means committee, chaired by Senator Ralph Recto.

At present, ABI’s beer products are classified under the low-priced bracket with a current tax classification of P10.41 per liter while San Miguel’s Pale Pilsen falls under the mid-priced bracket with a tax classification of P15.49 per liter. Its San Mig Light falls under the high-priced classification with P20.57 per liter 

On House Bill 5727, authored by Cavite Rep. Joseph Abaya, and which the House of Representatives approved last month, Asia Brewery said the measure also discriminates against its products over San Miguel’s fermented liquor drinks.

The measure is also among the bills being considered by the Senate committee.

“Only low-priced beer will have a +32 percent tax increase. Mid and high-priced beer are exempt from tax increases. San Miguel Beer (mid-tax bracket) and San Mig Light (high-tax bracket) will be exempted from any increase in taxes in 2013. On the other hand, low priced Gold Eagle beer, Beer na Beer and Colt45 will have a 32 percent tax increase in the same manner that tobacco products will have 700 percent increase in taxes,” Asia Brewery said in its position paper.

Representing San Miguel, Ginebra San Miguel Inc. manager Cynthia de Castro said in a Senate committee hearing last week that San Miguel supports House Bill 5727.

“We believe that HB 5727 provides acceptable tax rates and tax structure,” De Castro said but expressed concerns on both the Lacson and Santiago bills.

“Large price increases in our products would result in reduce volume,” she said.

The Aquino administration is seeking to raise taxes on alcohol and cigarettes and is pushing for a unitary sin tax rate on alcohol and cigarettes from the current multi-tiered system.

The measure approved by the House of Representatives seeks to raise P31.35 billion in incremental revenues in the first year of implementation. Proceeds would be used for the government’s health care program and affected tobacco farmers.