FINANCE Secretary Benjamin E. Diokno said he is studying the liberalization of sugar imports to soften the blow on the food industry amid proposals to tax sugary food and beverages.
In a chat with the media on Friday, Mr. Diokno said that freeing up sugar imports a “reasonable compromise” for volume users of sugar.
“Expectedly, producers and sellers of sugary products subjected to tax will object as it will raise the selling price of their products to the market,” Mr. Diokno said in a Viber message to reporters after the chat.
“But knowing the big difference between the world price and the domestic price of sugar, a major input in the industry, then allowing the industry to import their own sugar requirement would reduce their cost of production. This is the ‘sweetener’ or incentive for producers of sugary products to accept the broader, simpler tax on sugary products,” he added.
Mr. Diokno said the model is the Rice Tariffication Law “for all the products which are covered by all these non-tariff barriers.”
Rice tariffication allowed private parties a free hand to import rice, which was formerly a government monopoly. The importers would then pay a 35% tariff on Southeast Asian grain, generating funds for the government to pay for rice industry modernization.
Mr. Diokno said there is no need for legislation to allow the industry to import sugar.
“You don’t need a law for access to imports. With just a policy, you will be allowed to import sugar, that’s okay,” he added.
Last week, the DoF announced plans to impose a tax on “junk food” and raise the excise tax on sweetened beverages.
The proposal seeks to place a P10 tax per 100 grams or a P10 tax per 100 milliliters of pre-packaged food deemed to lack nutritional value, including confectioneries, snacks, and desserts exceeding the Department of Health’s thresholds for fat, salt, and sugar content.
It is also seeking to increase the excise tax on sweetened beverages to P12 regardless of the type of sweetener used.
“This tax rate will be indexed annually by 4%, and exemptions will be eliminated to broaden the tax base. These measures aim to strengthen the effectiveness of the sweetened beverage tax by further discouraging the consumption of such beverages,” Mr. Diokno said.
Under the Tax Reform for Acceleration and Inclusion law, the excise tax on sweetened beverages differs based on the sweetener used. The tax is P6 per liter for drinks containing caloric or non-caloric sweeteners, and P12 per liter for drinks containing high-fructose corn syrup or such sweeteners in combination.
“The proposal makes good economic sense. It simplifies the tax system — one uniform rate is better than dual rates. It achieves the proposal to make Filipinos live healthier and longer lives. In the long run, it also reduces the costs to the government for providing healthcare for its people,” Mr. Diokno added.
The DoF expects the tax package to generate additional revenue of P76 billion in its first year, as well as result in a 21% reduction in consumption of junk food.
Mr. Diokno said that the government is still studying exemptions to the junk food tax amid objections centered on the proposal’s impact on poor consumers.
“We are consulting with the National Nutrition Council and the Department of Health. We are not yet firm with what we’ve released. If you’re thinking of (instant noodles), that won’t be covered. That’s really for the poorest,” he said.
Mr. Diokno said that the list of excluded products from the junk food tax will likely come out in the second half of the year.
While the bill has yet to be drafted, Mr. Diokno said that it should be signed into law before the elections in 2025.
“After that, it’s hard to pass reform bills. You want the reform in the first two years of your administration. That’s the window of opportunity,” he added.
United Sugar Producers Federation of the Philippines President Manuel R. Lamata said the organization supports the tax on sweetened beverages, but not the call to liberalize sugar imports.
“We are against liberalization. Look what is happening to the rice industry, it is dying. We will fight him (Mr. Diokno) to the last. We are for increasing taxes on soft drinks, tetra packs, etc., especially those using high fructose corn syrup. He should double the taxes there,” Mr. Lamata said in a Viber message.
Since last year, beverage companies and food manufacturers have been pushing to be allowed to directly import sugar amid elevated prices due to limited supply. — Luisa Maria Jacinta C. Jocson