A previous similar tax had a devastating impact on the drinks industry when it was introduced years ago. But sales of sweetened beverages have since seen double-digit annual growth after this luxury tax was lifted in 2004.
Now, finance officials have asked the Health Ministry to study whether sugary drinks constitute a health threat, which would make them eligible to join an excise list of high-bracket tax items, Suahasil Nazara, head of the ministry’s Fiscal Policy Agency, told the Wall Street Journal.
In the Philippines, where a bill to impose PHP10 (US$0.21) on each litre of sweetened beverages has been passing through government, sugarcane planters have come out in opposition to the move.
Concerned that drinks manufacturers will not include the tax in the retail prices of their products, and instead push suppliers into shaving their margins, the National Federation of Sugarcane Planters said its members would bear the brunt of the tax.
“We need to make our voices heard so that our national leaders will understand the plight of the sugar industry, particularly the tens of thousands of marginalised sugar farmers who will be further burdened by this proposed tax,” said Enrique Rojas, its president.
“Our planters are already burdened by value-added tax and creditable withholding tax. Now they want to impose additional burden on us with this so-called soft drink tax. We cannot absorb this proposed tax which is simply excessive and unfair.”
Senatorial candidate Martin Romualdez also joined the debate by urging lawmakers to slow down with their sugar tax plans.
“The proposed law might benefit the national coffers but it surely would serve as the final nail on the coffin of the already dying sugar industry in the country,” Romualdez said.
However, the bill has been enjoying political support and was recently passed by the government’s ways and means committee.