ANGARA WARNS POSSIBLE WTO VIOLATION WITH PROPOSED TWO-TIERED SUGAR TAX

Senator Sonny Angara has cautioned that the proposed two-tiered excise taxes on sugar-sweetened beverages may violate the rules of the World Trade Organization (WTO).

The tax reform measure recently passed by the House of Representatives includes a provision imposing a P10 excise tax on every liter of sugar-sweetened beverages containing locally produced sugar, while others will be taxed P20 per liter.

"The WTO may find such two-tiered taxation discriminatory as the trade body generally bars its members from taxing imported product at higher rates to favor domestic products. As a member country of WTO, we should ensure that our tax regimes fully comply with international rules," said Angara, chairman of the ways and means committee.

During last week's Senate hearing on sugar-sweetened beverage tax, the Department of Finance (DOF), the Department of Trade and Industry, the Department of Foreign Affairs, and the National Economic Development Authority likewise stated that they do not support the two-tier system to avoid possible challenge at the WTO level.

In 2011, the WTO has ruled that the Philippines had violated its obligations under the General Agreement on Tariffs and Trade by taxing foreign alcoholic beverages at rates 10 to 40 times higher than brands made locally from home-grown materials such as sugar and palm.

Meanwhile, Angara said his committee will consider lowering the rates, limiting the coverage, and shifting to sugar-content taxation from a volume-based taxation.

Under the House bill, sugar-sweetened beverages include sweetened juice drinks, tea and coffee; all carbonated beverage with added sugar; flavored water; energy drinks; sports drinks; powdered drinks not classified as milk, juice, tea and coffee; cereal and grain beverages; and other non-alcoholic beverages that contain sugar.

Based on the latest price survey of the DOF, the retail prices of a 1L Coca-Cola bottle will increase from P22 to P34; sachet prices of powdered drinks Nestea, Tang or Eight O' Clock will increase from P9 to P20; 3-in-1 coffee from P5 to P8.

The senator noted that with the current proposal, prices of some sugary drinks will increase by 50 percent, which he said is much higher compared to other countries that imposed similar taxes.

In Mexico, initial reports on its sweetened beverages tax, which began in 2014, showed that retail prices increased by about 12 percent while soda purchases declined by 10 percent.

"Nakikiisa po tayo sa layuning resolbahin ang nakaaalarmang paglaganap ng diabetes at obesity sa bansa. Pero kasabay nito, dapat ay siguruhin natin na hindi magiging pabigat sa ating mga ordinaryong kababayan ang pagtaas ng presyo," Angara said.