PCCI chair: Lobby vs softdrinks tax 'very strong'

MANILA, Philippine -- A landmark tax on sweetened beverages is likely to face an uphill battle in Congress as a "very strong" lobby against it has already started, putting at risk additional revenues under the tax reform program.

"As far as soft drinks are concerned, there is a very strong lobby (against it)," said Donald Dee, honorary chairman of the Philippine Chamber of Commerce and Industry (PCCI).

Business groups like PCCI had expressed support for the government's comprehensive tax reform program and Dee did not say where the lobbyists are from.

He did mention, however, that there seemed to be "no economic study" correlating health risks with high sugar intake, which is the cornerstone of the Department of Finance's proposal.

"For some, like construction workers, soft drinks serve as energy drinks. It's very easy for them to buy it," Dee said at the Philippine Business Conference in Pasay City on Wednesday.

In response, Finance Undersecretary Antonette Tionko said discussions are ongoing among parties that will be affected. "It really has to be studied carefully," she said.

"We know, for instance, that some consider soft drinks as meal replacement. That is being considered in this exercise," she said.

Lobbying against higher taxes is not new. In 2011, revisions to the excise tax on tobacco and alcohol faced opposition from cigarette and liquor companies, who warned it could result in job losses.

This time, the new tax of P10 per liter for sweetened beverage could draw some criticisms from companies that will be affected. So far, no company has come out against it.

The DOF segregated the tax reform into five packages. The first, which lowers personal income taxes and removes value-added tax exemptions, has already been submitted to the House Ways and Means Committee.

It aims to generate around P200 billion in additional revenues. 

Tionko said the second part of Package One will include the sugar tax and a new round of increases for excise levies on alcohol and tobacco. No estimates on additional revenues were given.

Budget Secretary Benjamin Diokno, in the same forum, said he sees the first package getting passed "before the end of the year" and implemented next year.

Quirino Rep. Dakila Cua, chair of House ways and means committee, earlier said only committee approval may be secured by December. 

Despite looming opposition to sweetened beverage tax, Tionko said the target to pass all the tax reform packages by 2018 remains. 

"There is nothing that stops us from submitting package two even if package one is approved yet," she said. 

In the first place, the reason why the whole program was divided into five was to avoid their passage's delay, Tionko explained.

"There are so many issues that get tackled when you pass it as one package that everything gets stalled. We do not want that," she said.