Bill seeks to impose additional 10% tax on soft drink products

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Tuesday, March 4, 2014

A BILL was recently filed in the House of Representatives seeking to impose additional taxes for non-alcoholic and other beverage products.

House Bill 3365 wants to increase the ad valorem tax on soft drinks and carbonated beverages sold in bottles and other tight containers by 10 percent.

The bill's author Nueva Ecija Representative Estrellita Suansing said that the revenue collected from soft drinks tax would go to a rehabilitation fund for calamity victims and would be used to fund programs such as infrastructure projects, housing and livelihood.


She said that the taxation of non-alcoholic beverage is not a new concept since it is already applied in other countries.

"Other countries like the USA, France, Netherlands and Finland have realized the need to impose taxes on soft drinks and carbonated drinks," Suansing said.

Suansing said that the soft drink industry is currently being subject to value added tax, 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 percent VAT and customs duties if these are imported.

Stella Montejo, head of the Department of Finance (DOF) Fiscal Policy and Planning Office, said during a hearing of House committee on ways and means, said that about P10.5 billion revenues can be generated from higher tax on soft drinks and other non-alcoholic drinks.

On his part, Health Undersecretary Nemesio Gaco backed the proposal, saying reduction in the consumption of sweet products would lessen the diabetes cases and other related diseases in the country.

Gaco said that about 44 Filipinos died of diabetes every day and this may attributed to high consumption of sweet drinks such as soft drinks.

"We are fully supporting the bill. Reports said the number two cause of death is lifestyle-related diseases," Gaco said.

Meanwhile, lawyer Adel Tamano, vice president for public affairs and communication of Coca-Cola Philippines Inc., in the same hearing, said that by increasing the taxes, operations of the soft drinks companies will be affected.

He said that the plan may also affect the industry's workforce while the retail business like sari-sari stores and eatery will suffer more.

"There are many ways to provide employment and income, not only through taxes," said Tamano, who also represented the Beverage Industry Association of the Philippines.

Under the bill, the secretary of DOF upon consultation with the Secretary of Budget and Management and commissioner of Bureau of Internal Revenue (BIR) shall promulgate the necessary rules and regulations for the effective implementation of this act. (Sunnex)

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