Development of a sweetened beverage tax, Philippines

Abstract

ProblemBoth sugar-sweetened beverage consumption and the incidence of obesity have increased in the Philippines in recent years.ApproachA proposal to tax sugar-sweetened beverages was introduced in the House of Representatives and merged into a proposed comprehensive Tax Reform for Acceleration and Inclusion (TRAIN) Bill to increase the likelihood of acceptance. The health department and finance department recommended a policy that would maximize benefits to both public health and government revenue. To advance discussions, the health department expanded the health argument to include the country’s poor performance in oral health. The approved TRAIN Law adopted the term sweetened beverage to emphasize that the tax covers both sugar and non-sugar sweetened beverages. The tax rate was set to 6.00 Philippine pesos (0.111 United States dollars) per litre of sweetened beverages. The sugar industry successfully lobbied for higher tax rates on beverages containing high-fructose corn syrup, resulting in a differential rate of 12.00 Philippine pesos per litre.Local settingDespite a 12% value-added tax on sugar-sweetened beverages, sales had been sustained by enhanced marketing and product variants being offered in small portions.Relevant changesOne month after implementation of the tax in 1 January 2018, prices of taxable sweetened beverages had increased by 16.6 to 20.6% and sales in sari-sari (convenience) stores had declined 8.7%.Lessons learntThe tax benefited from high-level government commitment and support, keeping policy simple reduced opportunities for tax avoidance and evasion, and taking both health and non-health considerations into account were helpful in arguing for the tax.

Health Taxes on Tobacco, Alcohol, Food and Drinks in Low- and Middle-Income Countries: A Scoping Review of Policy Content, Actors, Process and Context

“…• Governance and administrative benefits of simplified and uniform taxation measures were explicated by some papers, 48,63,64 yet tiered structures, with rates based on production capacity or concentration of particular ingredients, were also common. 55,59,[65][66][67][68] Tiered taxations are promoted by a growing body of literature, including Baker et al 53 and Roubal 55 in relation to sweetened drinks, as a means of incentivising product reformulation.…”

“…46,48,51 However, other sources suggest that tiered structures associated with some commodities can reflect industry involvement in weakening measures; ensuring that they are geared towards competitors or smaller fragments of the market. 46,63,66 This has been the case with tobacco in Indonesia, where tiered measures have embedded conditions favourable to industry. [65][66][67][68] As alluded to by Williams 64 and Kaiser et al, 48 if insufficiently monitored, tiered measures may also complicate administration and risk diminishing the health impact of fiscal measures.…”

“…Common techniques include fostering and embracing ties to the political and economic elite 46,75,77,81,84,86,87,99,100 ; funding or supporting political parties 86 ; and establishing lobbying and front groups prone to deception, disputing evidence and directly interfering in policy process. 15,42,46,47,49,51,53,55,56,59,60,63,65,66,68,71,73,79,85,86,94,[96][97][98][99][101][102][103][104] Industry interference often results in stalled or diluted fiscal mechanisms; undermining the strength and sustainability of measures. 45,49,51,53,61,66,68,73,79,81,…”

“…Direct support by multilateral agencies, NGOs and philanthropic trusts was identified to expedite the design and implementation of fiscal measures. While the WHO was held in high regard for their technical advice, 45,55,60,63,98 sources also highlighted multisectoral consensus building to derive from engagement with the Food and Agriculture Organization (FAO), IMF, the World Bank, and other national and international NGOs and philanthropic trusts. 53,61,62,68,71,73,104,113 Locally-based offices of multilateral agencies, seed organisations and links between multi-lateral actors and local organisations sometimes blurred the boundaries between multilateral and civil society action.…”

“…52,53,92 The design and implementation phases of fiscal measures sometimes saw the emergence of nuanced frames capable of bridging more disparate interests. 53 Onagan et al 63 observed that measures framed with exclusive health or revenue objectives gained less inter-ministerial traction than those proposing dual objectives. The 'win-win' phraseology, [121][122][123] often used to account for the projected health and economic benefits of fiscal health policy, is hence a particularly useful and well used frame for uniting otherwise disparate coalitions around mutually-beneficial goals.…”