By Imee Charlee C. Delavin (from Businessworld Online)
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| Coca Cola remains the strong market leader of bottled soda in the Philippines. (Photo: Ilagan City, Isabela Coca-Cola Plant. Courtesy of nornad927@gmail.com) |
THE DEPARTMENT of Finance (DoF) on Tuesday said the government could generate about P10.5-billion additional revenues by imposing a 10% ad valorem tax on soft drinks and other carbonated beverages.
"About P10.5-billion revenues can be generated from higher tax on soft drinks and other non-alcoholic, carbonated drinks," Stella B. Montejo, head of the DoF Fiscal Policy and Planning Office told the House committee on ways and means during the hearing on House Bill (HB) 3365 or the proposed An Act Imposing a 10% Ad Valorem Tax on Soft drinks and Carbonated Drinks.
Citing studies showing that the increased price would lead to reduced consumption, Ms. Montejo noted that raising the prices of soft drinks and carbonated beverages -- as a result of imposing additional tax -- will consequently reduce consumption.
The National Tax Research Center (NTRC) through its officer-in-charge, Deputy Executive Director Teresita L. Solomon, projected an additional revenue of P7.7 billion for the government coffers.
BETTER HEALTH
While the Finance department cited the financial gains of imposing additional tax on soft drinks and other carbonated drinks, the Department of Health (DoH) on the same hearing cited the possible health benefits of the move, which the department said would possibly decrease cases of diabetes "once consumption of said sweet products will be reduced."
Health Undersecretary Nemesio Gaco said the reduced consumption will ensure better health for Filipinos, as he noted that soft drinks’ caloric content "is too high causing various ailments such as diabetes."
Mr. Gaco said about 44 Filipinos die of diabetes everyday, and medical experts said this could be attributed to excessive consumption of soft drinks.
Meanwhile, lawyer Adel A. Tamano, vice-president for public affairs and communications of Coca-Cola Philippines, Inc., and who also represented the Beverage Industry Association of the Philippines at the hearing, said the tax would impact adversely not only on soft drinks makers but more importantly, retailers, who he called are "the pillars of the industry." "There are many ways to provide employment and income, not only through taxes," Mr. Tamano said.
RICE BLAMED
He noted that it is not fair to "demonize" a specific beverage as being the sole cause of diabetes among Filipinos.
"In the Philippines, in terms of percentage, where do most Filipinos get their calories? It’s not from soft drinks. It accounts for less than 10% of the caloric intake. It’s from rice. If the issue here is caloric intake, don’t look at soft drinks," he said.
HB 3365 was filed on Nov. 18 last year by Nueva Ecija Rep. Estrellita B. Suansing (1st district). It was referred to the Committee on Ways and Means last Nov. 25 for consideration.
The proposed bill seeks to insert a new section. which will be designated as Section 150-A Chapter IV, Title VI of the National Internal Revenue Code.
The new section will read: "Soft drinks and Carbonated Drinks. There shall be levied, assessed and collected a ten percent (10%) ad valorem tax on soft drinks and carbonated drinks sold in bottle and other tight container." "The amount to be collected under this Act shall be designated as the Rehabilitation Fund for victims of calamities to be allotted for the rehabilitation program such as livelihood development, mass housing, road construction and other infrastructure projects on places affected by sever and destructive natural calamities," the bill read.
In filing HB 3365, Ms. Suansing said the country needs necessary funds and revenues for the rehabilitation of areas heavily damaged by the destructive calamities that hit the country last year including typhoon Yolanda (international name: Haiyan) which killed at least 6,201 and caused infrastructure and farm damage pegged at some P39.82 billion.
"Aside from rehabilitation fund, another purpose of the bill is to curb the consumption of soft drinks and carbonated drinks. There have been studies which have shown that consumption of soft drinks and other carbonated drinks increase the risk of developing health problems," she added in the explanatory note of the bill.
Ms. Suansing noted that taxation of non-alcoholic beverage is not a new concept.
"Other countries like the USA, France, Netherlands and Finland have realized the need to impose taxes on soft drinks and carbonated drinks," she said.
At present, Ms. Suansing said the soft drink industry is being subject to value-added tax (VAT), income tax, withholding tax, local and real property taxes, and customs duties. "On the other hand, flavored and colored syrups used in the manufacturing of soft drinks are not subject to excise tax, and only to the 12% VAT and customs duties if these are imported," she added.
Citing studies showing that the increased price would lead to reduced consumption, Ms. Montejo noted that raising the prices of soft drinks and carbonated beverages -- as a result of imposing additional tax -- will consequently reduce consumption.
The National Tax Research Center (NTRC) through its officer-in-charge, Deputy Executive Director Teresita L. Solomon, projected an additional revenue of P7.7 billion for the government coffers.
BETTER HEALTH
While the Finance department cited the financial gains of imposing additional tax on soft drinks and other carbonated drinks, the Department of Health (DoH) on the same hearing cited the possible health benefits of the move, which the department said would possibly decrease cases of diabetes "once consumption of said sweet products will be reduced."
Health Undersecretary Nemesio Gaco said the reduced consumption will ensure better health for Filipinos, as he noted that soft drinks’ caloric content "is too high causing various ailments such as diabetes."
Mr. Gaco said about 44 Filipinos die of diabetes everyday, and medical experts said this could be attributed to excessive consumption of soft drinks.
Meanwhile, lawyer Adel A. Tamano, vice-president for public affairs and communications of Coca-Cola Philippines, Inc., and who also represented the Beverage Industry Association of the Philippines at the hearing, said the tax would impact adversely not only on soft drinks makers but more importantly, retailers, who he called are "the pillars of the industry." "There are many ways to provide employment and income, not only through taxes," Mr. Tamano said.
RICE BLAMED
He noted that it is not fair to "demonize" a specific beverage as being the sole cause of diabetes among Filipinos.
"In the Philippines, in terms of percentage, where do most Filipinos get their calories? It’s not from soft drinks. It accounts for less than 10% of the caloric intake. It’s from rice. If the issue here is caloric intake, don’t look at soft drinks," he said.
HB 3365 was filed on Nov. 18 last year by Nueva Ecija Rep. Estrellita B. Suansing (1st district). It was referred to the Committee on Ways and Means last Nov. 25 for consideration.
The proposed bill seeks to insert a new section. which will be designated as Section 150-A Chapter IV, Title VI of the National Internal Revenue Code.
The new section will read: "Soft drinks and Carbonated Drinks. There shall be levied, assessed and collected a ten percent (10%) ad valorem tax on soft drinks and carbonated drinks sold in bottle and other tight container." "The amount to be collected under this Act shall be designated as the Rehabilitation Fund for victims of calamities to be allotted for the rehabilitation program such as livelihood development, mass housing, road construction and other infrastructure projects on places affected by sever and destructive natural calamities," the bill read.
In filing HB 3365, Ms. Suansing said the country needs necessary funds and revenues for the rehabilitation of areas heavily damaged by the destructive calamities that hit the country last year including typhoon Yolanda (international name: Haiyan) which killed at least 6,201 and caused infrastructure and farm damage pegged at some P39.82 billion.
"Aside from rehabilitation fund, another purpose of the bill is to curb the consumption of soft drinks and carbonated drinks. There have been studies which have shown that consumption of soft drinks and other carbonated drinks increase the risk of developing health problems," she added in the explanatory note of the bill.
Ms. Suansing noted that taxation of non-alcoholic beverage is not a new concept.
"Other countries like the USA, France, Netherlands and Finland have realized the need to impose taxes on soft drinks and carbonated drinks," she said.
At present, Ms. Suansing said the soft drink industry is being subject to value-added tax (VAT), income tax, withholding tax, local and real property taxes, and customs duties. "On the other hand, flavored and colored syrups used in the manufacturing of soft drinks are not subject to excise tax, and only to the 12% VAT and customs duties if these are imported," she added.
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