Amid vigorous opposition from beverage producers, the Ways and Means Committee of the House of Representatives has approved a measure imposing a P10 excise tax on sugar-sweetened drinks.

The additional tax will be levied on top of the current 12% value-added tax on these products. The excise tax will be increased by 4% each year starting January 1, 2017 if the measure, House Bill 3365,  is approved next year.

HB 3365 covers soft drinks, soda drinks, fruit drinks, and punch, sports drinks, sweetened tea, coffee drinks, energy drinks and all non-alcoholic ready-to-drink beverages.

Excluded are 100 percent natural fruit juices, 100 percent natural vegetable juices, yogurt and fruit-flavored yogurt beverages, meal replacement beverages, weight loss products, and all milk products.

The Beverage Industry Association of the Philippines has strongly opposed the measure, saying that it deprives poor Filipino consumers of the power to purchase affordable beverages, such as 3-in-1 coffee, soft drinks and powdered juice drinks.

But lawmakers backing the measure said that on top of generating more revenues, the bill would help curb obesity and health risks leading to tooth decay, hyperacidity,  diabetes, blood sugar disorders and heart disease among Filipinos. 

Additional revenues from the measure will be allocated as follows under HB 3365:

• 50% to the National Treasury
• 20% to the Department of Health for the provision of medicine and medical assistance to indigent patients with diabetes, and other related non-communicable diseases through provincial or district hospitals
• 20% to the Department of Education to provide access to potable water in public schools and sports facilities, and for community-based obesity, diabetes, dental caries prevention campaign and other diet-related health awareness programs
• 3% to the Department of Interior and Local Government for the provision of potable water supply
• 2% to the Food and Nutrition Research Institute for research and development program
• 2% to the Bureau of Internal Revenue for tax administration
• 3% to the Food and Drug Administration in pursuit of its mandate to ensure the safety, efficacy, or quality of health products

Mexico, Norway, France and several states in the United States are among the countries that currently  impose  a “sugar” tax on carbonated drinks and other sweetened beverages.