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Publication Detail
NTRC TRJ-5: Proposed Imposition of Excise Tax on Sugar Sweetened Beverage in the Philippines

Sugar-sweetened beverages (SSBs) refer to non-alcoholic beverages of any constitution (liquid, powder, or concentrates) that are pre-packed and sealed in accordance with the Food and Drug Administration (FDA) Standard, that contain sugar added by the manufacturers. An excise tax on SSBs is being proposed to reduce consumption of drinks with added sugar that causes adverse health effects. It is a health measure aimed at influencing consumers to improve their beverage consumption patterns in order to achieve better health outcomes. SSB consumption has been positively linked with growing rates of obesity in many parts of the world. These beverages contain added sugar such as sucrose or fructose in large amounts, which contribute to the overall energy density of diets. It is said that SSBs have little nutritional value and do not provide the same nutrients that can be found in healthy food and drinks. Thus, regular consumption of SSBs results in increased total energy intake which can lead to unhealthy weight gain. There is a proposal to impose among others, a PhP10.00 excise tax per liter of volume capacity on SSBs containing purely locally produced sugar and PhP20.00 for other beverages that will take effect beginning January 1, 2018. The rate of tax shall be indexed to inflation once every 3 years after considering the effect of the three-year cumulative CPI via rules and regulations to be issued by the Secretary of Finance. These beverages include: (a) sweetened juice drinks; (b) sweetened tea and coffee; and (c) other beverages such as all carbonated beverages with added sugar, including those with caloric and non-caloric sweeteners; flavored water; energy drinks; sport drinks; powdered drinks not classified as milk, juice, tea and coffee; cereal and grain beverages; and other non-alcoholic beverages that contain added sugar. Excluded are: (a) plain milk and milk drink products without added sugar; (b) all milk products; (c) 100% fruit juices; (d) 100% natural vegetable juices; (e) meal replacement and medically indicated beverages; (f) ground coffee; and (g) unsweetened tea. The imposition of an excise tax on SSBs is deemed timely and justifiable on the ground that these beverages are addicting for some, and have been substituted for drinking water. Certainly, the habit of excessive consumption of these products causes adverse health effects. Thus, given a strong public support, together with substantial health benefits and additional revenue that could be expected from the tax, it is a highly supported policy option of the government.

National Tax Research Center
Authors Keywords
NTRC; excise tax; Sugar Sweetened Beverage ;
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Published in 2017 and available in the NTRC Library or can be downloaded as full text Downloaded 170 times since January 31, 2019