SENATOR Sonny Angara said Sunday the proposed two-tiered excise taxes on sugar-sweetened beverages could violate the rules of the World Trade Organization.
“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 products,” said Angara, chairman of the ways and means committee.
“As a member country of the WTO, we should ensure that our tax regimes fully comply with international rules.”
The tax reform measure recently passed by the House of Representatives includes a provision imposing a 10-peso excise tax on every liter of sugar-sweetened beverage containing locally produced sugar, while others will be taxed P20 per liter.
During last week’s Senate hearing on sugar-sweetened beverage tax, the Department of Finance, the Department of Trade and Industry, the Department of Foreign Affairs and the National Economic Development Authority likewise said they were not supporting the two-tier system to avoid possible challenge at the WTO.
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 the brands made locally from home-grown materials such as sugar and palm.
Angara said his committee would consider lowering the rates, limiting the coverage and shifting to sugar-content taxation from volume-based taxation.
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 price of a one- liter Coca-Cola bottle will increase from P22 to P34; the sachet prices of powdered drinks Nestea, Tang or Eight O’ Clock will increase from P9 to P20; and 3-in-1 coffee from P5 to P8.
Angara said that, with the proposal, the prices of some sugary drinks would increase by 50 percent or much higher than in other countries.
Meanwhile, Senator Leila de Lima has called for a thorough review of the possible adverse impact of the administration-sponsored Tax Reform for Acceleration and Inclusion or TRAIN program on millions of poor families.
She has filed Senate Resolution 407 urging the appropriate Senate committee to study the potential effects of the TRAIN, which has been passed on third and final reading at the House of Representatives.
“There is an urgent need to investigate such impact in aid of legislation, especially in light of the TRAIN bill in the Lower House,” De Lima says in her resolution.
The TRAIN, a priority measure of the Duterte administration, seeks to lower personal income taxes and estate taxes but will impose higher excise taxes on fuel, sugar sweetened beverages and new cars to recover the losses from the lower personal and estate taxes.
Critics of the tax reform program claim that the increase in excise taxes will drive up the prices of basic commodities and added to the burden of the poor.
“The government must be ready to withstand the economic shocks of the proposal while taking into consideration other economic factors like rising unemployment,” De Lima says in her resolution.
According to the Philippine Statistics Authority, 6.6 percent or around 4.6 million of the work force are unemployed and stand to be the most affected by the increase in the prices of prime commodities caused by the tax reform package of the Duterte administration.