Philippine economy

Beverage makers support income tax reform
Beverage makers support income tax reform
But the Beverage Industry Association of the Philippines still opposes the sweetened beverage tax, calling the measure 'anti-poor' and 'anti-business'

MANILA, Philippines – The Beverage Industry Association of the Philippines (BIAP) expressed support for calls to reform the income tax system in the country, but remained opposed to sweetened beverage tax.

In a statement released Tuesday, November 10, BIAP said, “We believe this reduces inequity in the taxation structure, promotes inclusive growth, empowers our consumers and the middle-class, and boost our country’s competitiveness.”

It added that BIAP concurs with organizations like the Philippine Chamber of Commerce and Industry (PCCI); Tax Management Association of the Philippines (TMAP); Federation of Philippine Industries (FPI); and the American Chamber of Commerce (AmCham), in their call for genuine income tax reform.

“At its core is giving Filipino consumers more power and more of their hard-earned money back, which they will plow back into the broader economy through spending on goods and services.”

But BIAP said that fiscal initiatives such as tax reforms must be fair, sustainable, and holistic.

“Tax measures that simply trade one form of revenue for another do not and will not address the problems of fiscal reform,” the group added.

Thus BIAP again expressed its opposition to House Bill No. 3365, which seeks to impose additional taxes on soft drinks and other sweetened beverages.

“It is anti-poor and anti-business,” BIAP said.

Not pro-Filipino consumer

BIAP said to impose a tax on soft drinks and other sweetened beverages like powdered juice drinks, 3-in-1 coffee, and ready-to-drink juice is “taking away… power from the Filipino consumer,” the group said. (READ: Beverage makers: Soft drink tax to ‘burden’ consumers, economy)

The proposed tax measure exempts 100% pure and natural fruit and vegetable juices; 100%
pure or fresh milk; all milk products and alternatives as well as yogurt and yogurt beverages – “all products typically positioned in the premium market and consumed by more affluent consumers.”

BIAP added that the additional tax on basic goods and products commonly purchased by majority of Filipinos, particularly those in the lower socio-economic classes will make items like coffee, juice, and soft drinks more expensive for ordinary consumers.

“To give more of the hard-earned income back to the people through the reduction in income tax and then only to take it away by taxing commodities bought by lower income and middle-class Filipinos is a disservice to the Filipino people,” BIAP said.

It added that it would be a double-whammy for low-wage earners who are either exempt or do not pay income tax because they will not benefit from the reduction in tax rates but will bear the higher prices of sweetened beverages.

“Wealthy Filipino who can afford pure beverages will be spared from the tax on sweetened beverages. In addition, crafted drinks such as those sold in coffee or tea shops, which are similarly sweetened or have sugar, will not be taxed a single centavo,” BIAP pointed out.

Anti-poor legislation

BIAP said that instead of taxing goods typically purchased by consumers in higher socio-economic brackets, HB No. 3365 put the burden of taxation on commodities consumed by middle, lower middle, and lower income classes.

“Viewed in this light, it is obvious that the bill, effectively, is anti-poor legistation,” BIAP said.

“We understand the need to offset the estimated revenue loss from income tax reform, but to do so in the form of a new commodity tax on consumer goods like sweetened beverages is anti-poor and goes against the very spirit of income tax reform,” the group said.

BIAP also said that its opposition to the sweetened beverage tax measure is in line with the Aquino administration’s position that there would be no new taxes for consumers – a promise that President Aquino has kept over the length of his term.

“While we need tax reform, we must do so while keeping consumer welfare and the overall competitiveness of Philippine industries in mind,” BIAP said. –

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