Foreign chambers oppose ‘junk food’ tax

THE JOINT Foreign Chambers (JFC) urged the Philippine government to reconsider its plan to impose new taxes on “junk food” and higher taxes on sweetened beverages, saying this is “not the right time.”

“We believe it is not the right time to introduce additional taxes on products primarily consumed by middle and lower middle-class households because the country is still recovering from the pandemic and a prolonged period of high inflation,” the JFC said in a joint statement on Thursday. 

Finance Secretary Benjamin E. Diokno earlier this month said the government is pushing for taxes on junk food and sweetened beverage tax to address “diabetes, obesity, and non-communicable diseases related to poor diet,” as well as raise P76 billion in additional revenues in the first year of implementation.

While acknowledging the need to boost revenues and improve the health of Filipinos, the JFC said the government should carefully reassess proposals for new taxes “that will be inflationary for Filipino consumers and discriminatory to certain businesses.”

“The proposal would also affect micro and small enterprises that rely on selling these products as a source of income,” the foreign chambers said.

The Finance department is proposing a P10 tax per 100 grams or a P10 tax per 100 milliliters on “pre-packaged foods lacking nutritional value” including confectioneries, snacks, and desserts that exceed the Health department’s thresholds for fat, salt, and sugar content.

The JFC, which includes the American and European chambers of commerce, said the new tax may also reduce market competition to the detriment of Filipino consumers.

“Imposing additional taxes will only strain the capacity of businesses in affected sectors to continue operations and grow their businesses, especially when issues related to the supply of certain raw materials remain unresolved,” the JFC said.

Before imposing higher taxes on sugary drinks, the JFC said the government should study the impact of the existing tax on sugar sweetened beverages under the Tax Reform for Acceleration and Inclusion (TRAIN) Law.

The TRAIN Law introduced an excise tax of P6 per liter for drinks containing caloric or non-caloric sweetener, and P12 per liter for drinks containing high-fructose corn syrup or such sweeteners in combination.

Under the Department of Finance’s new proposal, the sweetened beverage tax would be raised to P12 per liter for any kind of sweetener used.

“We also strongly recommend the prioritization of improvements to tax administration — such as in the proposed Ease of Paying Taxes Act — and nontax interventions as alternative, noninflationary measures to raise government revenues and improve health outcomes of Filipinos,” the JFC said.

Other signatories to the JFC statement include the Australian-New Zealand Chamber of Commerce of the Philippines, Japanese Chamber of Commerce and Industry of the Philippines, Inc., Korean Chamber of Commerce Philippines, and the Philippine Association of Multinational Companies Regional Headquarters, Inc. — Revin Mikhael D. Ochave