Group says beverage tax to drop micro biz sales to 60%

FILE: The business group said the SSB tax will translate to 25 to 50 percent increase in prices of SSB.
It was also noted that SSB shared 40 percent to the total sales of sari-sari stores.
(Photo: CafeCredit.com/ Flcikr)

MANILA— The Federation of Philippine Industries (FPI) said that the proposed sugar-sweetened beverages (SSB) tax under the Tax Reform for Acceleration and Inclusion (TRAIN) bill will result to drop of sales of micro enterprises by 40 to 60 percent.

Aside from consumers who will shoulder the SSB tax, FPI noted that about 1.3 million sari-sari stores and eateries will be affected by the increase in tax on SSB which include commonly consumed beverages of Filipinos like juice drinks, coffee, soft drinks, tea, powdered milk, ready-to-drink milk, energy and sports drinks, and flavored water, among others.

The business group said the SSB tax will translate to 25 to 50 percent increase in prices of SSB.
It was also noted that SSB shared 40 percent to the total sales of sari-sari stores.

In the Senate version of the TRAIN bill, it targets to levy PHP10 per liter for drinks using high-fructose corn syrup, PHP5 per liter for drinks using purely caloric sweeteners, and PHP3 per liter for using purely non-caloric sweeteners or a mix of caloric and non-caloric sweeteners.

FPI Chairman Jesus Arranza said in a briefing Tuesday that the SSB tax is discriminatory and anti-competitive as it will indirectly create two markets because of taxation.

Arranza cited that 3-in-1 coffee mix mostly consumed by the lower income classes will be taxed, but the coffee drinks from coffee shop, which consumers are mostly from high- and middle-income classes, will not be taxed since the companies are paying for a value-added tax (VAT).
Moreover, citing a Nielsen survey in 2016, he mentioned that Classes D and E consumers compose 88 percent of juice drinks consumption, 87 percent of powdered juice consumption, and 79 percent of soft drinks consumption.

“This discriminatory nature also promotes a radical imbalance in the business landscape. The rule of taxation must be uniform and equitable; the SSB tax in its current form stands in violation of competition laws, equal protection of law, and even free-trade agreements that the Philippines is signatory to. It burdens select industries and favors one market over another,” he explained.

The FPI chair has also urged the Philippine Competition Commission (PCC) to take a stand in the proposed imposition of SSB tax.

“I think it’s about time for the PCC to come out with their opinion, considering that this is a subject matter being discussed now openly,” Arranza said.