Stakeholders seek balanced approach regarding sugar tax hike
Asian Consulting Group chief tax advisor, Mon Abrea cautioned that raising tax rates would not necessarily result in a proportional increase in government revenue, as consumers and manufacturers could adjust their behavior.
Business groups, tax experts and small-business representatives have urged the government to adopt an evidence-based approach to the proposed increase in excise taxes on sweetened beverages, warning that higher rates could affect consumer prices, employment and business operations.
Multi-stakeholder roundtable
The call followed a multi-stakeholder roundtable convened by Arangkada Philippines at the American Chamber of Commerce of the Philippines office in Makati City. Participants examined the proposed sweetened beverage tax increase under the ProGRESS tax package.
Arangkada Philippines, or The Arangkada Philippines Project (TAPP) is the flagship economic and policy advocacy initiative of the Joint Foreign Chambers of the Philippines.
Mon Abrea, chief tax advisor of Asian Consulting Group, cautioned that raising tax rates would not necessarily result in a proportional increase in government revenue, as consumers and manufacturers could adjust their behavior.
“Higher rate does not necessarily mean proportionately higher revenue. The tax base moves,” Abrea said.
Review existing tax system
He called for a review of the existing tax system, greater emphasis on sugar content, incentives for product reformulation and broader public-health measures. He also cited the United Kingdom’s tiered tax system as an example of how taxation could encourage manufacturers to produce lower-sugar beverages.
Dr. David Joseph Emmanuel B. Yap Jr., executive director of the Socio-Economic Research Bureau under the Congressional Policy and Budget Research Department, questioned whether a volume-based tax adequately reflects differences in sugar content among products.
Sari-sari stores’ earnings squeezed
Joan Hipolito, national president of the Philippine Association of Stores and Carinderia Owners Inc., said higher prices could squeeze the earnings of sari-sari stores and carinderias while making beverages less affordable for customers.
“For small businesses like ours, higher prices directly reduce our income,” Hipolito said.”
Richard Heydarian, global columnist of Nikkei Asian Review, said the government should focus on how the tax is designed and implemented to balance public-health objectives with economic considerations.
Arangkada Philippines Project Director Matthew Scanlin said tax policy should account for its effects on households, workers and businesses, alongside revenue and health goals.