THE proposed tax increase on sweetened beverages needs to be canceled because it will disadvantage many small businesses, Go Negosyo Founder Jose Ma. A. Concepcion III said.
“I think they should junk the whole thing because it will affect a lot of people,” Mr. Concepcion told reporters on the sidelines of the National MSME (micro-, small-, and medium-sized enterprises) Summit 2023 in Manila last week.
Mr. Concepcion is also the chief executive officer of listed food and beverage manufacturer RFM Corp.
“I think the lawmakers also need to think it through because many small businesses will be affected,” Mr. Concepcion said.
Last month, Finance Secretary Benjamin E. Diokno announced a joint proposal by the Finance and Health departments to impose a P10 tax per 100 grams or a P10 tax per 100 milliliters on “pre-packaged foods lacking nutritional value” including confectioneries, snacks, and desserts that breach the government thresholds for fat, salt, and sugar content.
The proposal is also hoping to increase the tax on sweetened beverages to P12 per liter for any kind of sweetener used in production. The top rate used to apply only to those sweetened by high fructose corn syrup (HFCS).
Drinks that use caloric or non-caloric sweeteners are currently charged a P6 excise tax per liter while drinks that use HFCS or any such sweeteners in combination are charged P12 per liter under Republic Act No. 10963 or the Tax Reform for Acceleration and Inclusion Law.
The government pitched the proposal as a way to address health problems like diabetes, obesity and non-communicable diseases attributed to poor diet. The higher taxes are expected to generate P76 billion in revenue in the first year of implementation.
In early July, food manufacturers expressed their opposition to the proposal, saying it could result in higher prices and could “disproportionately target the most vulnerable segments of society.”
“We firmly believe that there are more effective and less disruptive ways to raise government revenue without resorting to discriminatory tax schemes,” Philippine Chamber of Food Manufacturers, Inc. (PCFMI) President Rita Imelda B. Palabyab said.
“The PCFMI highlights the potential negative repercussions of this proposed tax and emphasizes the importance of exploring alternative interventions to promote positive health outcomes and revenue generation,” she added.
The Joint Foreign Chambers (JFC) also opposed the proposal, saying that it would hinder small businesses.
“The proposal would affect micro and small enterprises that rely on selling these products as a source of income,” the JFC said in a previous statement.
“Imposing additional taxes will only strain the capacity of businesses in affected sectors to continue operations and grow their businesses, especially when issues related to the supply of certain raw materials remain unresolved,” they added. — Revin Mikhael D. Ochave