Congress Approves 10% Soft Drinks Tax Bill, BIR Satisfied

soft drinks tax

Philippine congressmen has approved House Bill 3365, or the so-called “soft drinks tax” bill this Tuesday. Once it becomes a law, the Bureau of Internal Revenue (BIR) will collect 10% tax from each bottle of soft drinks and other sweetened beverages.

After less than an hour of deliberation on its third reading, the House of Representatives led by House Speaker Feliciano Belmonte, Jr., the soft drink bill received affirmative votes almost unanimously by present congressmen. None of them gave even a minute of explanation about their votes.

Last August, Nueva Ecija Rep. Estrellita B. Suansing filed House Bill 3365, which seeks to impose a 10% ad valorem tax on all brands of soft drinks and sweetened beverages. Beside the estimated P10.5-billion additional revenue for the government, the said bill shall also serve as a pro-health measure.

“We are not going to ban soft drinks. We are just curbing the consumption; we are reducing the consumption because of the effect to the health. If more tax will be imposed on soft drinks, people will start reducing their consumption.” Rep. Suansing said when she filed the bill.

Under the bill, the taxes to be collect shall go the “rehabilitation fund” of the national government. This includes financial support on building roads, housing projects, and other related projects in areas affected by natural calamities such as Yolanda.

That time, the bill received full support from doctors’ groups, health professionals, and the Department of Health (DOH). Although the government health agency noted that diabetes has already affected three million Filipinos, studies will still be conducted on the potential harm of soft drinks to a person’s health.

On the other hand, the business sector strongly opposed the bill. Atty. Adel Tamano, the representative of the Beverage Industry Association of the Philippines, said the reduction of soft drink consumption will have a huge negative effect on people employed by soft drinks manufacturers and retailers as well.

“Taxation will not solve the problem of obesity. People consume many kinds of food and beverages so no one single food or beverage can be said responsible for making people obese.” Atty. Tamano said, noting that imposing higher tax on soft drinks may also hurt the economy.

Meanwhile, BIR Commissioner Kim Henares said she is happy that the bill has passed Congress. Henares, who received criticisms early this year for BIR’s controversial tax campaign advertisements, said she is satisfied with the 10% additional tax on soft drinks.

“Although increasing government revenues through taxes is not the priority of President (Noynoy) Aquino, this will be a great help considering that the money will go the victims of calamities. They badly need support.” Henares noted, with the bill expected for deliberation in the Senate by mid 2015.

Back in 2008, Quezon Rep. Danilo Suarez filed House Bill 595 with the same ad valorem tax but on colored syrups used by soft drinks manufacturers. However, it did not materialize. Currently, soft drink makers are paying 12% value added tax (VAT) on their products.

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