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The Department of Finance (DOF) is not amenable to Senator Juan Edgardo Angara's suggestion to implement the proposed levy on sugar sweetened beverages via a three-tier system.
"We oppose the tiered approach. Meaning 'yung first seven grams will be tax free and then after that would be taxable," Finance Undersecretary Karl Chua said during the Economic Journalists Association of the Philippines (EJAP) Economic Forum in Manila on Friday.
Chua note the tiered approach may compel manufacturers to come up with smaller packaging. "So you can drink three of them with no taxes," the Finance official said.
It will defeat the purpose of imposing excise tax on sugary drinks as a health measure, he added.
During deliberations on the comprehensive tax reform bill, Angara floated the idea of implementing the excise tax on sugar sweetened beverages under a three-tier system to incentivize those who manufacture drinks with less sugar content.
The senator argued that putting a fixed P10 or P5 per liter tax would make it difficult to distinguish beverages with lesser sugar content than those with higher sugar content.
Chua noted the DOF can work with the suggestion to cut in half the proposed P10 per liter excise tax on sugary drinks.
"I think five to 10 is something we can work with because lower than 5, I don’t think you will meet the health objective. Because the study shows that a 20-percent increase in the price would have an impact on your consumption decision," the Finance official said.
Chua reiterated that the tax on sugary drinks is not a revenue measure but a health measure.
"The DOF is not after the revenue per se, it is after the health impact," he said.
"There was a consensus that this tax is needed. The medical evidence linking sugar to obesity is overwhelming," he added.
Chua noted the concern among stakeholders is what would be an optimal tax. "The P5 per liter is an option, and the per gram of sugar tax is also an option," he said. — VDS, GMA News