In an interview Friday, June 23, 2023, retailer Robert Go said the proposed measure will have a tremendous impact on retail sales as junk food and sweetened beverages account for the biggest chunk of sales in sari-sari stores, especially in the province and poorer barangays.
“The biggest that will be hit (by this tax measure) will be the sari-sari stores since many of them just carry junk food and sweet beverages. These are the big items they buy in supermarkets to resell in neighborhood areas or near schools and in the sidewalks,” said Go, owner of Princewarehouse Club Inc.
Bad timing
According to Go, it may not be a good time to burden micro-entrepreneurs with these additional taxes since most are still recuperating from the losses incurred during the Covid-19 pandemic when schools temporarily closed.
Go also said prices of sweetened beverages have already increased due to the spike in sugar prices. Some sweetened beverage brands, due to high production cost, have been out of stock for many months now, he said.
“Sugar (price) is still high, so sweetened beverages were hit by lower sales, high cost and high price,” said Go.
Finance Secretary Benjamin Diokno on Wednesday, June 21, estimated that the proposed new taxes could generate an additional P76 billion in revenues in the first year of implementation.
Under the program, there will be a P10 tax per 100 grams or P10 tax per 100 milliliters on pre-packaged foods that lack nutritional value and go beyond the Department of Health’s (DOH) specified thresholds for fat, salt and sugar content. These products include confectioneries, snacks, desserts and frozen confectioneries.
The government is also looking to increase the sweetened beverage tax rate to P12 per liter, regardless of the type of sweetener used, from the current P6 per liter.
Universal health
The DOH supported the proposal, saying the revenues generated by “sugar” taxes could help provide additional funding for the Universal Health Care (UHC) program.
“We still need to pay for more health programs and services. Hence, the DOH supports any measures which may provide additional money to do UHC,” it said. “This (can) significantly help the DOH in the implementation of UHC Act.”
Moreover, the DOH believes that it will be an essential tool in helping reduce public consumption of unhealthy food and drinks.
“The DOH recognizes the potential benefits of imposing a health tax or excise tax on unhealthy food and beverages to reduce the burden of malnutrition and non-communicable diseases,” it said.
“From a health perspective, I am for limiting the intake of sugary drinks. We have a diabetes problem in the Philippines. Taxes on sugary drinks is one way to limit but should be accompanied with (a) health warning,” said Charles Kenneth Co, president of the Cebu Chamber of Commerce and Industry.
However, consumer group Bantay Palengke described the proposed taxes as an additional price burden.
“We know for a fact that many poor Filipinos rely on cheap instant noodles and canned goods due to our current economic situation. How will they manage their meager budget if we will add another P10 on every 100 grams of affordable products that can help them ease hunger?” said Bantay Palengke convenor Lester Codog in a statement.
“We don’t argue on the health issues resulting from the consumption of junk food. Pero ang junk food para sa iilan ay pantawid-gutom para sa mas marami nating kababayan. There are other ways to approach this problem without adding another burden to our people. As for the need for revenue, we suggest that the government address the inefficiency in our tax collection first and plug the leaks in revenue collection,” Codog said.
Instead of slapping additional taxes, the group is looking to propose ways for the government to subsidize healthy food, such as fruits and vegetables, so poor people will be able to afford more nutritious food.
“This could be a win-win situation for both our farmers and consumers, for the management of food prices and for health. It should be clarified, however, that the subsidies should come first before we consider any new tax on the poor’s staple food,” Codog said.
In a separate interview Friday, Kelie Ko, president of Mandaue Chamber of Commerce and Industry, said additional taxes are “definitely a burden on consumers as manufacturers will just pass on the additional cost and taxes to their customers.”
“If the purpose is to promote good health, there are many ways of educating the public about healthy diets. A punitive action such as increasing taxes will hit the poor more than the rich,” he said.
Victory and peril
Sheila Lauren Palma-Mijares, a mother of three, believes the proposal, if approved and implemented, is a victory in both financial and healthcare aspects of the country but it will be a peril and burden to consumers.
Mijares, who is also a retail player based in Surigao City, said: “We already saw the impact when higher taxes were slapped on cigarettes. Consumers still buy despite the high price because it’s a vice.”
Like Go, Mijares said the large portion of sales of sari-sari stores come from junk food and beverages. “As prices of these products increase, the working capital of sari-sari store owners will be limited. Uncertainty will also rise whether consumers will still buy these products or not.”
Consumption
Economist and professor Ronilo Balbieran of the University of Asia and the Pacific told SunStar Cebu that if certain products are slapped with additional taxes, consumption of those goods would not automatically disappear, even when the price is higher, but rather diminish over a substantially long period of time.
“With the adjustment process, the government is able to collect more taxes, especially from the people who presumably are richer, who can pay for the additional tax to satisfy their cravings. But for those with lower income who can no longer afford the higher prices, their consumption will substantially decrease, and presumably, their health will become better,” Balbieran said.
The economist explained that these additional taxes on junk food and sweetened beverages are called excise taxes that are usually imposed on goods that you want producers to produce less and consumers to consume less of.
He added that some excise taxes are also called “sin taxes” because they are imposed on more addicting and more “sinful” products that negatively affect a person’s well-being and may even affect the well-being of the entire community/country.
“So you impose the sin taxes to help people avoid the ‘sin,’ and in the process, the government earns a little bit more, while helping the people curb their consumption lifestyle and transform it to a healthier one,” Balbieran said. (HDT / SunStar Philippines)