Dateline Southeast Asia

Milk formats and three-in-one removed from Philippines sugar tax draft

By RJ Whitehead

- Last updated on GMT

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In the Philippines, a proposed excise tax on sweetened beverages will not cover milk and infant formula, as had been originally mooted. 

Neither will it apply to growing-up milk, and powdered, ready to drink, flavoured and fermented milk with less than five grams of sugar per 100ml.

These categories feature in an updated version of the Tax Reform for Acceleration and Inclusion (TRAIN) legislation presented by Sonny Angara, chairman of the Ways and Means committee, for approval by the Senate.

Angara said the committee had been unable to justify a tax on a nutritional like milk, whereas the other sweetened beverages featuring in the bill had been shown to be unhealthy.

Three-in-one coffee mix was also excluded from the updated TRAIN legislation due to demographics that suggest that nine out of 10 consumers of the product are on low incomes and would be hardest hit by the tax. 

Meanwhile, the Federation of Philippine Industries warned that the proposed tax under would result to a 40-60% drop in sales at 1.3m sari-sari stores and small food businesses. 

The lobby group added that the tax would translate to a 25-50% increase at these mom-and-pop establishments—which account for some 40% of all soft-drink sales in the country. 

FPI Chairman Jesus Arranza said the tax would be discriminatory, with consumers from the two lowest socioeconomic groups accounting for 79%of soft drinks consumption, according to a Nielsen study.

This discriminatory nature also promotes a radical imbalance in the business landscape​,” Arranza said. 

The rule of taxation must be uniform and equitable; the tax in its current form stands in violation of competition laws, equal protection of law, and even free-trade agreements that the Philippines is signatory to.​”

He also urged the Philippine Competition Commission to campaign against the proposed tax, saying: “I think it’s about time for the PCC to come out with their opinion, considering that this is a subject matter being discussed now openly​.”

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