To cushion the effect of a tax levy on sugary products, the country’s Finance Secretary Benjamin Diokno has proposed for the industrial manufacturers of these products to be allowed to import sugar to meet their production requirements. This according to him will act as a ‘sweetener’ for these manufacturers to accept the broader, simpler tax on sugary products.
Presently, domestic manufacturers have to rely on domestic sugar, which is more costly than imported sugar, to meet their production needs. By allowing import, these manufacturers are able to save on costs, while the government can achieve its long term goal of making Filipinos live and eat healthier food and beverages as manufacturers also seek to trim the sugar contents in their products.
The Philippines’ Department of Finance (DOF) and the Department of Health are jointly pursuing a junk food and sweetened beverage tax as a proactive measure to tackle diabetes, obesity, and non-communicable diseases related to poor diet. Under the proposed tax program, the DOF plans to impose Pesos 10 (US$0.18) per 100g or 100ml tax on pre-packaged foods that lack nutritional value and these include confectioneries, snacks, desserts, and frozen confectioneries that exceed the DOH’s specified thresholds for fat, salt, and sugar content.
In addition, the DOF also plans to increase the sweetened beverage tax rate under the TRAIN Law to Pesos 12 (US$0.22) per litre, regardless of the type of sweetener used. This tax rate will be indexed by 4 percent annually and exemptions will be eliminated to broaden the tax base. These measures aim to strengthen the effectiveness of the sweetened beverage tax by further discouraging the consumption of such beverages.
For the government, the introduction of the junk food and sweetened beverage tax package is projected to generate an additional Pesos 76 billion (US$1.4 billion) to state coffers during the first year. At the same time, the tax is projected to reduce consumption of junk food by 21%.
This new law is highly expected to come into effect within this year.