Angara wants proposed sweet drinks tax compliant with WTO rules

Sen. Juan Edgardo “Sonny” Angara. (File photo by ROMEO BUGANTE / Senate Public Relations and Information Bureau)

The proposed two-tiered excise taxes on sugar-sweetened beverages, which would impose higher taxes on foreign beverages over  locally made products, might violate the rules of the World Trade Organization (WTO), Senator Sonny Angara said on Friday.

“The WTO may find such two-tiered taxation discriminatory as the trade body generally bars its members from taxing imported product at higher rates to favor domestic product,” Angara, chairman of the Senate ways and means committee, said in a statement.

“As a member country of WTO, we should ensure that our tax regimes fully comply with international rules,” he stressed.

The Department of Trade and Industry (DTI), the Department of Foreign Affairs (DFA), and the National Economic Development Authority (NEDA) also objected the two-tier system to avoid possible challenge with the WTO.

In the Duterte administration’s tax reform package, it imposes P10 excise tax on every liter of sugar-sweetened beverages containing locally produced sugar, while others will be taxed P20 per liter.

READ: Angara to remove anti-poor provisions in proposed sweet drinks tax

This will not be the first time the Philippines would violate a WTO agreement because in 2011, the WTO ruled that the Philippines had violated its obligations under the General Agreement on Tariffs and Trade by taxing foreign alcoholic beverages at rates 10 to 40 times higher than brands made locally from home-grown materials such as sugar and palm.

Angara said his committee will consider lowering the rates, limiting the coverage, and shifting to sugar-content taxation from a volume-based taxation.

Also under the House bill, sugar-sweetened beverages include sweetened juice drinks, tea and coffee; all carbonated beverage with added sugar; flavored water; energy drinks; sports drinks; powdered drinks not classified as milk, juice, tea and coffee; cereal and grain beverages; and other non-alcoholic beverages that contain sugar.

Based on the latest price survey of the Department of Finance, the retail prices of a one-liter Coca-Cola bottle will increase from P22 to P34; sachet prices of powdered drinks Nestea, Tang or Eight O’ Clock will increase from P9 to P20; 3-in-1 coffee from P5 to P8.

With the current proposal, prices of some sugary drinks will increase by 50 percent, which Angara said is much higher compared to other countries that imposed similar taxes.

The senator said that while he supports the battle against diabetes and obesity by imposing higher taxes on sugary beverages, he said taxes should not put too much burden on ordinary Filipinos consuming those drinks.

“Nakikiisa po tayo sa layuning resolbahin ang nakaaalarmang paglaganap ng diabetes at obesity sa bansa. Pero kasabay nito, dapat ay siguruhin natin na hindi magiging pabigat sa ating mga ordinaryong kababayan ang pagtaas ng presyo,” Angara said.

(We are one in this mission of resolving the alarming rate of diabetes and obesity in the country. But in accordance to this, we should make sure that the additional cost will not be a burden to our ordinary countrymen.) JPV/rga