Existing stocks of sweetened drinks exempt from new tax rates – DTI

MANILA, Philippines – Filipinos may only start noticing higher prices for sugar-sweetened beverages in the 2nd half of January, as existing inventories are exempt from the new excise tax rates, according to the Department of Trade and Industry (DTI).

Trade and Industry Secretary Ramon Lopez on Wednesday, January 3, said the new excise tax rates should not yet affect prices of sweetened drinks for up to 3 weeks.

This is because local distributors have existing inventory bought from manufacturers at old prices.

“We are getting confirmation now with softdrink companies how many days [worth of] inventory their distributors and retailers [have]. My estimate based on experience is they deliver twice a month. The usual level [of inventory] is two weeks,” Lopez said in a text message to reporters, explaining that the excise tax is to be applied on the importation or refinery side.

Because of this, Lopez said the DTI is thinking of freezing the prices of sodas and other sugar-sweetened beverages until the middle of the month. (READ: INFOGRAPHIC: How tax reform hits your favorite drinks)

“If so, we can mandate prices of sugar-sweetened [beverages] at retail not to change until January 15,” the trade chief said.

Lopez also clarified that the increase in oil prices last Tuesday, January 2, was due to the usual movement of world crude prices, which petroleum companies announce every Tuesday.

The Department of Energy (DOE) “covers monitoring of gas station prices but DTI can coordinate with them for monitoring or receiving consumer complaints,” added Lopez. (READ: Filipinos to feel impact of higher fuel tax starting mid-January)

Based on the newly-implemented Tax Reform for Acceleration and Inclusion (TRAIN) law, drinks that use purely caloric and non-caloric sweeteners like  sweetened juice beverages; sweetened tea; carbonated beverages; flavored water; energy and sports drinks; powdered drinks not classified as milk, juice, tea, and coffee; as well as cereal and grain beverages will carry a P6 excise tax per liter.

Those using purely high fructose corn syrup will incur P12 excise tax per liter.

For most products, manufacturers and retailers should not increase their prices, Lopez said.

“We are watching out for hoarders and profiteers. We are monitoring closely price changes [in the market],” the DTI chief said, adding that they are ensuring prices are below suggested retail prices (SRP). – Rappler.com