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US Business Lobby Urges Philippines To Drop Sugary Drinks Tax

by Mike Godfrey, Tax-News.com, Washington

11 December 2017


US business associations say the Philippines' proposed sugar-sweetened beverage tax may infringe World Trade Organization (WTO) rules and would dent the country's competitiveness.

The tax is included in the Tax Reform and Acceleration and Inclusion (TRAIN) bill, which is before parliament for final approval and is expected to be submitted to President Rodrigo Duterte by December 16.

The tax would be PHP10 (USD0.20) per litre for certain sugar-sweetened beverages (SSB) that use locally produced sugar, while a levy of double that amount would apply to drinks produced with foreign sugar.

A joint statement from the US-ASEAN Business Council (USABC) and the Center for Strategic and International Studies (CSIS) obtained by several local media outlets said the tax would "violate global trading rules" and asked the Government to reconsider the legislation.

"The SSB provisions call for a doubled tax rate on sweeteners that are produced largely outside the Philippines but play a critical role in meeting Filipino demand for high quality and affordable food and beverage products. If passed as drafted, the legislation will hurt Philippine competitiveness at a time when other countries in ASEAN are stepping up their competitiveness for foreign direct investment," said Ernest Bower, a member of the Southeast Asia Advisory Board of CSIS, and Alexander Feldman, President and CEO of USABC.

"This discriminatory SSB tax provision sends the wrong message at exactly the wrong moment. If passed, the law will draw complaints in the World Trade Organization (WTO) and have a substantial chilling effect on foreign direct investment (FDI). Even the Philippines' Department of Foreign Affairs has warned that the two-tier SSB tax structure is discriminatory under WTO rules."

They argued that similar taxes elsewhere have "crippled beverage manufacturing industries" and caused "significant job losses, loss of revenue for small businesses, backlash against politicians in favor of such taxes, and [have resulted in] lower than targeted tax revenues."

"The imposition of such an exorbitant tax will have a negative impact on the further development of and investment in not only the agricultural sector, but also the beverage and food processing sectors in the Philippines," said the statement.

TAGS: tax | investment | small business | business | Denmark | foreign direct investment (FDI) | law | Mexico | Philippines | food | manufacturing | legislation | Indonesia | Tax

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