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Sugary drinks tax to hurt small store owners—local business group

The Federation of Philippine Industries on Tuesday expressed opposition to the proposed taxes on sugar-sweetened beverages, saying this will hurt small businesses and affect industry competition.

FPI chairman Jesus Arranza said in a news briefing the Philippine Competition Commission should look into the proposed tax measure on SSBs.

Arranza said the affected beverage manufacturers were now looking at the tax measure as an anti-competition act.

“This case is an example of a situation removing competition. I think it’s about time for the PCC to come up with an opinion,” he said.

FPI is a 132-corporation, 38-industry association.  Among its members is the Beverage Industry Association of the Philippines.  The group expressed strong opposition to the proposed SSB tax, labeling the bill as “discriminatory, regressive and anti-poor.”

“The SSB tax is an anti-poor measure by targeting staples not just patronized by lower income households, but the source of livelihood for sari-sari-store owners. It is essentially a pro-rich tax for exempting goods patronized by those in the higher-income brackets, who have alternative and more expensive sources for their sugar-sweetened beverages,” Arranza said.

Federation of Philippine Industries Inc. chairman Jesus Lim Arranza describes as anti-poor the proposed taxes on sugar-sweetened beverages during a news briefing at Makati Diamond Residences in Makati City. Lino Santos

The SSB tax bill based on volumetric content passed House approval while the Senate has its own revised version based on sugar content.

The Senate bill proposed a P10-per-liter tax on beverages with high-fructose content, P5 for sugar-based drinks and P3 for non-caloric sweeteners. Soft drinks, energy drinks, juices and powdered beverage mixes will be affected by the bill.

FPI said if implemented, the SSB tax would cause a 40 percent to 60 percent sales slump among sari-sari stores and other micro-enterprises, triggered by a 25 percent to 50 percent price increase of daily commodities. Othel V. Campos

“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,” said Arranza.

He said the bill would discriminate establishments offering blended juices and coffee drinks and even pastry shops.

The group said the SSB tax would be a threat to the health and growth of Philippine businesses, result in a dearth of new investments, compel a downsizing in operations and enact multi-sector job losses.

More than the business impact, the group also slammed the proponents’ claims that it is a health measure aimed at curbing rising incidence of diabetes and obesity in the country.

“There is no local study that directly correlates sweetened drinks as direct causative factors. In fact, just less than 2 percent of the Filipino caloric intake comes from sugar and syrup. Moreover, the incidence of obesity and of being overweight is more prevalent among the higher-income classes, whose common sources of sugar-containing goods are exempt from the tax,” Arranza said.

Arranza also expressed opposition to the tax imposed on non-caloric sweeteners, saying that “it will also pose an additional burden to senior citizens and to those who are already watching their sugar intake due to conditions like diabetes” which goes against claims that the tax is a health policy.

Topics: Federation of Philippine Industries , Jesus Arranza , Sugar-sweetened beverages , Taxes , Small businesses
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