Think tank suggests that tax on sugary drinks should be adjusted

Government Urged to Rethink Sugar-Sweetened Beverage Tax Rates

A recent policy brief from the Congressional Policy and Budget Research Department (CPBRD) of the House of Representatives has suggested that the government should consider adjusting the rates on sugar-sweetened beverages (SSB) as the effectiveness of the current tax measure has diminished since its implementation.

Implemented in 2018 as part of the tax reform package of the administration, the SSB tax imposed a P6 per liter tax on SSBs made with caloric or non-caloric sweeteners, and a P12 per liter tax on those made with high-fructose corn syrup. However, CPBRD noted that the initial impact of the tax has declined over time due to sustained inflation and changing market dynamics.

Despite the intention of reducing the consumption of harmful sugary drinks and addressing health issues like obesity, diabetes, and cardiovascular diseases, the CPBRD found that SSB consumption has remained strong even years after the implementation of the tax. Sales volume of SSBs like carbonates, juice drinks, energy drinks, and concentrates have continued to increase annually.

The CPBRD suggested that adjusting the tax rates could enhance the effectiveness of the measure over time. By modifying the rates based on a fixed inflation adjustment or implementing an ad valorem tax based on the value of the product, the government could potentially nudge consumer behavior towards healthier options and increase government revenues.

Former Finance Secretary Benjamin Diokno previously proposed an expanded levy on SSBs, but current Finance Secretary Ralph Recto has indicated he will not advocate for higher taxes on sugary beverages. As discussions continue, the government may need to reassess the SSB tax rates to better achieve the desired health outcomes and revenue generation.

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