Sugar millers to DOF: Reconsider proposed increase in beverage tax

MANILA, Philippines — Local sugar millers have warned that a proposed hike in sweetened beverage taxes could undermine the country’s sugar industry, as it continues to grapple from declining production.

In a statement, the Philippine Sugar Millers Association, Inc. (PSMA) urged the Department of Finance (DOF) to reconsider its proposal to increase the excise tax on sugar-sweetened beverages (SSB).

The group stressed that local sugar producers continue to face rising production costs, weak demand and declining cane tonnage and sugar production due to the effects of the red-striped soft scale insect (RSSI) infestation and El Niño.

PSMA executive director Jesus Barrera said the proposed SSB tax hike contradicts government policy.

“The government is encouraging sugar farmers to continue cultivating sugarcane and has recently extended emergency assistance to farmers struggling to recover from severe RSSI infestation. Yet the DOF is proposing a tax measure that could further weaken demand for the very sugar these farmers produce,” he added.

The DOF is proposing to increase the excise tax on SSBs to P20 per liter from the current P6 per liter under the agency’s Promoting Growth, Revenue and Equity toward Socio-Economic Sustainability (ProGRESS) Bill.

This is said to offset its proposed tax relief measures for middle-income earners and small businesses.

“This does little for our poor and marginalized sugar farmers, particularly our thousands of agrarian reform beneficiaries, who may bear the indirect economic burden of the SSB tax increase without receiving any corresponding benefit from the proposed income-tax relief,” Barrera said.

The PSMA also warned that any substantial hike in sweetened beverage taxes could lead beverage manufacturers, one of the major buyers of local sugar, to reduce production, pass on costs to consumers and lessen the sugar content of beverages.

It added that lower beverage sales could also mean that manufacturers would reduce their purchases of sugar, further weaken demand and place additional pressure on farmgate prices.