sugar sweetened beverage tax 10 leading causes of mortality: philippines, 2014 source: department of...

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Tax Reform for Acceleration and Inclusion

Package 1 – Sugar sweetened beverage tax

As of August 30, 2017 4:54 PM


Table of contents1. Key messages and highlights

2. Obesity

3. Diabetes

4. Sugar consumption

5. SSB consumption

6. SSB tax and better health

7. The reform: SSB tax

8. Arguments to tax certain products; Tax options

9. Economic impact

10. Overall impact on the people

11. Cross-country experience

12. Data on sugars and HFCS

13. Revenue estimates and methodology

14. Responding to critiques

15. SSB products and price impact

16. Summary price impact

17. Non-tax measures

8/30/2017 DEPARTMENT OF FINANCE 2


Key messages and highlights



Key messages1. The sugar-sweetened beverage (SSB) excise tax is a

health tax to help address diabetes and obesity given the high incidence of obesity and fast-growing incidence of diabetes.

2. The SSB excise tax is part of a package of the tax reform program for more inclusive growth and a healthy Philippines. The bigger package has both tax and non-tax components.

3. The SSB excise tax, as a health measure, encourages individuals to make healthy choices to ensure a more productive population that can contribute to the economy.




Key messages3. Why an SSB excise tax?

o Discourage consumption.

o Encourage consumption of healthier products.

o Raise public awareness of harms.

o Incentive for industry to develop healthier products.

o Raise revenues for health and education.

o Note that the regressivity argument is not valid for a non-essential or non-good.

4. Why tax SSB and not sugar broadly?

o Unnecessary: it has empty calories and little or no nutritional value, they do not replace rice or food, and we do not tell our children to drink them every day because they are healthy.

o Affordable: especially to the poor and youth, and sometimes cheaper than water

o Accessible: available in almost every corner, often not aware of the consequences. This is why SSB tax is a public policy.



Obesity




Article published by BusinessMirror Health & Fitness July 20-26, 2017


There is growing trend in overweight and obese adult Filipinos.


11.8

14

16.9

19.721.4

1.72.6 3.2

4.35.2

0

5

10

15

20

25

Perc

en

t

Prevalence of overweight and obesity among

Filipino adults 20 years and older

Overweight (BMI 25-29.9)Obese (BMI => 30)

Source: Philippine Association for the Study of Overweight and Obesity (PASOO); FNRI and National Nutrition Health Survey


The prevalence of malnutrition is inversely related to wealth, while the prevalence of overweightness and

obesity is positively related to wealth.

Wealth and residence breakdown of adult obesity

and chronic energy deficiency incidence


Source: 8th NNS


There is an increasing trend in prevalence of overweight/obese Filipinos through the years.

8/30/2017 12

5.86.8 6.6 7.4

9.1 8.6

4.96.1 6.2 6.7

8.3 9.2

24

26.628.4

31.1 31.1

0

5

10

15

20

25

30

35

2003 (6th

NNS)

2005

(updating

survey)

2008 (7th

NNS)

2011

(updating

survey)

2013 (8th

NNS)

2015

(updating

survey)

perc

en

t

Prevalence of overweight/obese* Filipinos

School-age children Adolescents Adults

Source: National Nutrition Survey conducted by FNRI


Prevalence of overweight/obesity is higher in richer quintiles.


16.6

23.5

29.8

37

43.7

0

5

10

15

20

25

30

35

40

45

50

Poorest Poor Middle Rich Richest

perc

en

t

Wealth quintile

Prevalence of overweight/obese among adults, 2015

Source: FNRI, 2015



Individuals with body mass exceeding 25 are considered overweight/obese.

Classification BMI (in metric) BMI (in imperial)

Underweight < 18.50 < 3.79

Normal range 18.50 to 24.99 3.79 to 5.12

Overweight 25.00 to 29.99 5.13 to 6.14

Obese class I 30.00 to 34.99 6.15 to 7.16

Obese class II 35.00 to 39.99 7.17 to 8.18

Obese class III > 40.00 > 8.18

Based on WHO standards


The ideal weight of an average Filipino, with height of 5’4”, range from 107lbs to 146lbs.


Classification BMI (in imperial) Weight (lbs)


Normal range 3.79 to 5.12 107.8 to 145.64

Overweight 5.13 to 6.14 145.65 to 174.65

Obese class I 6.15 to 7.16 174.66 to 203.66



Source: FNRI


The ideal weight of an average Filipina with height 5’0”, range

from 95lbs to 128 lbs.


Classification BMI (in imperial) Weight (lbs)


Normal range 3.79 to 5.12 94.75 to 128

Overweight 5.13 to 6.14 128.1 to 153.5

Obese class I 6.15 to 7.16 153.6 to 179



Source: FNRI


Diabetes


In 2015, there were around 3.6 million cases of diabetes in the Philippines*Source: International Diabetes Foundation


Complications of Diabetes

Source: Bate KL, et al. Med J Aust 2003; 179 (9): 498-503.

Diabetes is a major

contributor to the

leading cause of death

and disability in the

Philippines.


Diabetes is a major contributor to the leading cause of death and disability in the Philippines.


10

15

25

25

32

44

55

56

70

126

0 50 100 150

10. Certain conditions originating in the perinatal period

9. Nephritis, nephrotic syndrome and nephrosis

8. Tuberculosis, all forms

7. Chronic lower respiratory diseases

6. Diabetes mellitus

5. Accidents

4. Pneumonia

3. Malignant neoplasm

2. Diseases of the vascular system

1. Diseases of the heart

count in persons (in '000)

Top 10 leading causes of mortality: Philippines, 2014

Source: Department of Health




1.8

2.7

4.4

4.4

5.6

7.7

9.7

9.9

12.3

22.2

0 5 10 15 20 25

10. Certain conditions originating in the perinatal period

9. Nephritis, nephrotic syndrome and nephrosis

8. Tuberculosis, all forms

7. Chronic lower respiratory diseases

6. Diabetes mellitus

5. Accidents

4. Pneumonia

3. Malignant neoplasm

2. Diseases of the vascular system

1. Diseases of the heart

Percent distribution

Top 10 leading causes of death: Philippines, 2014

Source: Department of Health



Cause Number Rate (per 100,000

population)

1. Diseases of the heart 125,906 126.1

2. Diseases of the vascular system 69,913 70

3. Malignant neoplasm 56,219 56.3

4. Pneumonia 54,877 54.9

5. Accidents 43,853 43.9

6. Diabetes mellitus 31,687 31.7

7. Chronic lower respiratory diseases 25,114 25.1

8. Tuberculosis, all forms 24,929 25

9. Nephritis, nephrotic syndrome and nephrosis 15,359 15.4

10. Certain conditions originating in the perinatal period 10,174 10.2

Source: Department of Health (2014)



Diabetes is more common among the richer wealth quintiles, but there is faster increase in

diabetes prevalence in the poorer quintiles.


1.8

33.5

6.4

8.1

3.5

4.34.6

6.4

8.1

0

1

2

3

4

5

6

7

8

9

Poorest Poor Middle Rich Richest

pre

vale

nce

Wealth quintile

Prevalence of diabetes among adults

2008 2013

Sources: NSO, 2008 and FNRI 2013


Increasing prevalence of clinically diagnosed diabetes

8/30/2017 25




Increasing prevalence of clinically diagnosed diabetes

IN T

HO

US

AN

DS


Prevalence of diabetes, by income class


3.44

4.4

6

7.7

0

1

2

3

4

5

6

7

8

9

Per

cen

t

Household income class

Prevalence of diabetes, 2013

Source: FNRI


Prevalence of diabetes, by location


4.3

6

0

1

2

3

4

5

6

7

Per

cen

t

Location

Prevalence of diabetes, 2013

Source: FNRI


Prevalence of diabetes, by income class, urban


5.7

3.4

4.9

6.1

7.8

0

1

2

3

4

5

6

7

8

9

Per

cen

t


Prevalence of diabetes (urban), 2013

Source: FNRI


Prevalence of diabetes, by income class, rural


2.6

4.43.8

5.9

7.4

0

1

2

3

4

5

6

7

8

Per

cen

t


Prevalence of diabetes (rural), 2013

Source: FNRI


Sugar consumption




866 grams



855 grams

Source: FNRI


Products in “miscellaneous" food group include beverages,

condiments and others.


Source: FNRI, Philippine figures: Facts and Nutrition


Sugar consumption


Cases Percent share Grams of sugar Teaspoon

WHO recommended:

10%

10 50 12

WHO recommended:

5%

5 25 6

NNS total 10.7 53 9.9

Sugar and syrup 1.4 12 2.9

Milk and

milk products*

5.3 18 (45*0.4) 4.3

((45*0.4)/4.2)

Miscellaneous*

(includes other SSB)

4.0 23 (34*0.67) 2.7

((34*0.33)/4.2)

Coke (to compare) 39 9.3

One teaspoon of granulated sugar is equal to 4.2 grams.

*For milk and misc, assume half of calories comes from sugar.


SSB consumption



What are sugar sweetened beverages (SSBs)?

• SSBs are pre-packed drinks with free/added sugar.o Free sugars are monosaccharides and disaccharides

that are added to foods and beverages by the manufacturer, cook, or consumer, and sugars that are naturally present in honey, syrups, fruit juices, and fruit concentrates.

• One gram of sugar has 3.9 calories.

• One teaspoon of granulated sugar is equal to 4.2 grams.



Trends in SSB consumption

• Philippines ranked 11th worldwide in the consumption of soft drinks. In 2009, Filipinos consumed around 1.6 billion liters or an average of 17.8 liters per capita. (World Health Organization).

• FNRI list of most consumed products with sugar: 3-in-1 coffee, sugar brown and white, powdered milk, pandesal bread, soft drink, and chocolate flavoured drinks .



Sugar consumption from SSBs has been increasing over the years. Highest

consumption is from the richest quintile.


Income quintile 2003 2006 2009

Poorest 454 590 780

Poorer 1,037 1,247 1,521

Middle 1,755 1,970 2,256

Richer 2,734 2,847 3,177

Richest 4,873 4,929 5,179

National average 2,031 2,217 2,484

Sources: FIES and DOH staff estimatesNumbers are in grams per person per year calculated based on the PSA Family Income and Expenditure Surveys.


The top 3 deciles consume more than 50 percent of total SSBs in the Philippines



The poor spend around 4 percent of their income on SSBs (unadjusted)


Income

decile

Total income

(PHP)

Total

expenditure

(PHP)

SSB

expenditure

(PHP)

Share of SSB

exp. to

total income

(percent)

Share of SSB

exp. to total

exp. (percent)

1 55,489 56,976 2,299 4.1 4.0

2 87,841 85,781 3,711 4.2 4.3

3 111,800 104,970 4,864 4.4 4.6

4 135,731 124,655 5,859 4.3 4.7

5 163,435 147,290 6,779 4.1 4.6

6 199,148 174,528 8,179 4.1 4.7

7 248,691 213,466 9,664 3.9 4.5

8 319,221 265,497 11,715 3.7 4.4

9 439,779 350,851 13,824 3.1 3.9

10 908,654 624,251 18,937 2.1 3.0

Average 266,962 214,816 8,583 3.2 4.0

Sources: PSA and DOF staff estimates

Note: Sugar sweetened beverages include softdrinks, fruit juices, and sweetened milk, among others.

Average income, expenditure, and SSB expenditure per income decile (unadjusted)


The poor spend around 4 percent of their income on SSBs (adjusted)


Income

decile

Total income

(PHP)

Total

expenditure

(PHP)

SSB

expenditure

(PHP)

Share of SSB

exp. to

total income

(percent)

Share of SSB

exp. to total

exp. (percent)

1 55,489 56,976 2,299 4.1 4.0

2 87,841 85,781 3,711 4.2 4.3

3 111,801 104,971 4,864 4.4 4.6

4 135,738 124,661 5,859 4.3 4.7

5 163,473 147,324 6,781 4.1 4.6

6 199,354 174,709 8,188 4.1 4.7

7 249,844 214,456 9,709 3.9 4.5

8 325,857 271,016 11,958 3.7 4.4

9 480,750 383,536 15,112 3.1 3.9

10 1,288,033 884,887 26,843 2.1 3.0

Average 281,310 226,361 9,044 3.2 4.0


Average income, expenditure, and SSB expenditure per income decile (adjusted)


Detailed consumption of SSB, total unadjusted


Income decile SoftdrinksFruit juice and

concentrates

Coffee and

cocoa, instantEnergy drinks

Condensed,

evaporated, and

other

sweetened milk

Total SSB

consumption

1 235 189 1,109 22 744 2,299

2 398 330 1,674 41 1,268 3,711

3 527 410 2,146 56 1,726 4,864

4 600 533 2,509 71 2,146 5,859

5 721 615 2,745 93 2,605 6,779

6 822 758 3,191 95 3,313 8,179

7 952 900 3,554 117 4,141 9,664

8 1,081 1,056 3,936 150 5,491 11,715

9 1,278 1,302 4,351 166 6,727 13,824

10 1,607 2,099 4,597 286 10,348 18,937

Total 822 819 2,981 110 3,851 8,583

Sources: PSA, DOF staff estimates

Average annual detailed SSB consumption, total unadjusted, PHP


Detailed consumption of SSB, total adjusted



concentrates

Coffee and


Condensed,

evaporated, and

other

sweetened milk

Total SSB

consumption

1 235 189 1,109 22 744 2,299

2 398 330 1,674 41 1,268 3,711

3 527 410 2,146 56 1,726 4,864

4 600 533 2,509 71 2,146 5,859

5 721 616 2,746 93 2,606 6,781

6 823 759 3,195 95 3,316 8,188

7 956 904 3,571 118 4,160 9,709

8 1,104 1,078 4,018 153 5,606 11,958

9 1,397 1,424 4,756 181 7,354 15,112

10 2,278 2,975 6,516 405 14,669 26,843

Total 866 863 3,141 115 4,058 9,044


Average annual detailed SSB consumption, total adjusted, PHP


Detailed consumption of SSB, per capita unadjusted



concentrates

Coffee and


Condensed,

evaporated, and

other

sweetened milk

Total SSB

consumption

1 79 64 375 7 252 777

2 98 82 414 10 313 918

3 120 94 490 13 394 1,111

4 131 116 547 16 468 1,277

5 153 131 584 20 555 1,443

6 170 157 661 20 686 1,693

7 192 181 716 24 834 1,947

8 214 209 780 30 1,088 2,321

9 246 251 837 32 1,295 2,661

10 303 395 866 54 1,949 3,566

Total 179 178 648 24 837 1,865


Average annual detailed SSB consumption, per capita unadjusted, PHP


Detailed consumption of SSB, per capita adjusted



concentrates

Coffee and


Condensed,

evaporated, and

other

sweetened milk

Total SSB

consumption

1 79 64 375 7 252 777

2 98 82 414 10 313 918

3 120 94 490 13 394 1,111

4 131 116 547 16 468 1,277

5 153 131 584 20 555 1,443

6 170 157 661 20 687 1,695

7 193 182 720 24 838 1,956

8 219 214 796 30 1,111 2,370

9 269 274 915 35 1,416 2,909

10 429 560 1,227 76 2,763 5,055

Total 188 188 683 25 882 1,966


Average annual detailed SSB consumption, per capita adjusted, PHP


Young people “outgrow” milk products and “graduate” to other SSBs.


2,425

1,551

790

1,015

28

3,040

2,108

1,337

2,310

284

1,382

1,020

1,678

2,534

529

-

500

1,000

1,500

2,000

2,500

3,000

3,500

Plain milk Chocolate milk Softdrinks Coffee & tea Energy drinks

Co

un

t, in

th

ou

san

d p

ers

on

s

Consumption of SSBs by population groups

Pre-school School-age Adolescents

Source: National Nutrition Survey, 2008


Young people “outgrow” milk products and “graduate” to other SSBs.

8/30/2017 51



Students who usually drink carbonated soft drinks


77

6257 54 52 50

46 45 44 4238

34 34 33 31 29 2622 19

0

10

20

30

40

50

60

70

80

90

Per

cen

tStudents (ages 13-17) who usually drink carbonated soft

drinks one or more times per day during the past 30 days, percent

Source: Youth risk behavior surveillance system


Beverage Pre-school children School-aged children Adolescents

Male Female Male Female Male Female

Milk 85.25 86.50 37.55 37.83 18.57 23.15

Chocolate-based

beverages

29.69 25.66 26.58 25.31 14.80 16.23

Soy-based

beverages

0.00 0.10 0.00 0.00 0.00 0.00

Fruit-flavored

juice drinks

0.17 0.25 0.32 0.21 0.23 0.40

Soft drinks 14.07 13.46 16.20 16.73 24.66 26.67

Coffee and Tea 18.97 16.50 28.74 28.24 41.59 35.65

Energy drinks 1.14 0.00 7.00 0.00 15.81 1.77

Alcoholic

beverages

0.00 0.00 0.00 0.07 1.80 0.31

Other beverages 15.65 16.87 20.71 22.08 15.84 20.76

Proportion (%) of pre-school children, school-aged

children and adolescents consuming different types

of beverages by sex, NNS, Philippines: 2008

Golloso-Gubat MJ et al. Philippine Journal of Science, 144 (1): 31-41, June 2015


SSB tax and better health




Source: Institute for Health Metrics

and Evaluation (2015)

51

97

31

6

87

0

20

40

60

80

100

120

Overweight/ Obesity Diabetes Dental caries

in p

erc

en

t

National prevalence: Obesity,

diabetes and dental caries (2015)

Children Adults

Source: National Nutrition Survey, International Diabetes Federation, National Monitoring and

Evaluation Dental Survey, Philippine National Oral Health Survey (2015)

SSB excise tax can help address the growing problem of obesity.

Diabetes is the

leading cause

of disability in

the Philippines.4th


Why impose excise tax on SSBs?

• SSBs contribute to obesity, diabetes, and dental caries.o Soft drink consumption is significantly linked to overweight,

obesity, and diabetes worldwide, including in low- and middle-income countries.

o Habitual consumption of SSBs is associated with greater incidence of Type 2 diabetes, independently of adiposity; consumption of SSBs over years may be related to a substantial number of cases of new onset diabetes.

o Higher consumption of SSBs is associated with development of metabolic syndrome, Type 2 diabetes and weight gain.

• Diabetes, in turn, increases the risk of other NCDs such as cardiovascular diseases (stroke, heart attack), hypertension, chronic kidney diseases.

Sources: DOH, Basu, Imamura, and Malik



High SSB consumption is linked to increased obesity and diabetes incidence• Soft drink consumption is significantly linked to overweight, obesity,

and diabetes worldwide, including in low and middle-income countries (Sanjay, Basu et. al).

• Many studies show that drinking 1-2 SSBs a day increases the risk of developing type 2 diabetes by 26%. (Malik, et. al, 2010).

• Higher consumption of SSBs is associated with development of metabolic syndrome, Type 2 diabetes, and weight gain (Vasanti, Malik et. al).

• The more sugars are consumed, the more dental caries in both adults and children.

• Habitual consumption of SSBs is associated with greater incidence of Type 2 diabetes, independently of adiposity; consumption of SSBs over years may be related to a substantial number of cases of new onset diabetes (Fumiaki, Imamura et. al).



Increased consumption of artificially sweetened beverages increase the

risk of obesity, diabetes, and stroke

• Artificially sweetened soft drink consumption was associated with a higher risk of stroke anddementia (Pase, et. al., 2017).



Case studies on effectiveness of SSB taxation in other countries

• Sustained SSB taxation at a high tax rate could mitigate rising obesity and type 2 diabetes in India among both urban and rural subpopulations (Basu, et. al, 2014).



Reading the evidence right

• Health impact: overweight, diabetes, obesity, dental caries, and even heart ailments. But takes long to see the link.

• The short-term evidence is reduction in consumption.

• Studies should be of long duration to show evidence. It must be published in peer reviewed journals.

• Renowned health agencies supportive: US institute of medicine, European food safety agency, World cancer research fund, and American heart association.



The SSB tax



8/30/2017 62


8/30/2017 63

CTRP-Package-ONE_SSB-HB292 -

Copy.png


Proposed products in HB 5636 to be excluded from the SSB excise tax


ALL MILK PRODUCTS

including infant formula

and milk alternatives

(soy milk, almond milk,

flavored milk such as

chocolate milk)

100% NATURAL

VEGETABLE JUICES

MEDICALLY INDICATED

BEVERAGES

Meal replacement

therapies

PLAIN MILK

& MILK DRINK

PRODUCTS

without added

sugar

GROUND

COFFEE

UNSWEETENED

TEA

100% NATURAL

FRUIT JUICES


Rationale on the proposed rate

• The proposed rate is based on Powell, Chriqui, Khan, Wada & Chaloupka ( 2013 ), which stated that in order to reduce soda consumption, the tax rate should raise prices by at least 20 percent. This is equivalent to 10 pesos per liter for the most popular brand.



Proposed earmarking provisions for SSB excise tax in HB 5636

• 85% of the tax collected shall accrue to the general fund supporting:

o Operationalization and monitoring of non-tax measures to prevent NCDs including:

– Regulatory measures on marketing

– Mandatory labeling and sale of unhealthy food and beverages

– Nationwide information and advocacy measures to curb lifestyle related risk factors

– Direct provisions and incentive-based measures increasing access and affordability of healthier products

– Promotion of oral health

o Provision of sports facilities for public schools and access to potable drinking water supply in all public places.

o Develop and sustain school-based feeding programs.

o Prevention and awareness programs against obesity, overweight and dental caries.

o Funding FDA to fulfill its mandate of ensuring safety and quality of health products.



Proposed earmarking provisions for SSB excise tax in HB 5636

• 15% of the tax collection shall accrue to fund programs under the Sugarcane Industry Development act of 2015oTo help farmers increase productivity.

oTo provide livelihood opportunities, develop alternative farming systems and ultimately enhance farmers’ income.



Arguments to tax certain products;Tax options




Implementing a volume-based SSB tax


Pros Cons

• It is simple, transparent, and easy to administer.

• It is fair and neutral with respect to volume.

• Almost all countries that impose tax on SSBs have single

rate applied on all forms.

• Tax burden increases with quantity consume, therefore it is

progressive.

• Differentiating the tax structure to accommodate product

forms leads to unequal tax burden in the long-run. For

instance, applying a lower effective tax rate to powdered

forms of SSBs will shift consumption to those forms relative

to ready-to-drink forms of the same volume.

May not directly

address the health

objectives


Implementing a sugar-based SSB tax


Pros Cons

It is an ideal practice since it can address

the health objective

Difficult to implement.

Not all products in available in the market

have sugar content in the nutrition label.

It would entail FDA to validate the

declared and actual sugar content of each

product.

It is not a transparent way of taxing unlike

the volume excise tax and would be more

costly to operationalize and administer.

Some are obviously SSB, but there is no sugar content in the nutrition label.



Why sodas should be taxed• A 375 ml (12 fluid oz) Coke product has approximately 40g

of added sugar, equivalent to 10 teaspoons of sugar.

• A person does not manually add 10 teaspoons of sugar in his drink on a daily basis.

• SSBs basically contain sugar levels that an average person won't usually add for his personal consumption as part of his daily routine.

• Since SSBs are a non-core food, they are not recommended for consumption in government dietary advice. Consuming just one serving of SSBs will bring a person above the recommended intake for sugars (and this has yet to take into consideration the food products and other drinks that a person will be consuming for the rest of the day).



Why 3-in-1 powdered coffee should be taxed

• 3-in-1 coffee has approximately 12 g of added sugar which is equivalent to 3 teaspoons of sugar/3 sugar packets.

• An average person does not sweeten his cup of brewed coffee with 3 sugar packets on a daily basis.



It is cheaper to make a cup of coffee and mix the ingredients

than buying 3-in-1 powder coffee

Coffee 3-in-1 DIY 3-in-1 preparation

Actual price: PHP 5.50

Breakdown:

12.5 grams of sugar

5 grams of creamer

2.5 grams of coffee

Estimated price: PHP 3.30

Estimated cost:

12.5 grams of sugar: PHP 0.1

5 grams of creamer: PHP 1.20

2.5 grams of coffee: PHP 2

Estimated price after excise: PHP 7.00 Estimated price after excise: PHP 3.30

Price change: 27% Price change: 0% (no excise imposed

on raw sugar)



Serving sizeVolume

(ml)

Selling

price

(PHP)

Price

before

VAT

(PHP)

VAT

(PHP)

Selling

price

Price

before

VAT

(PHP)

VAT and

excise

(PHP)

Standard serving

sizes

Starbucks while

chocolate mocha

(tall size)

355 150.0 133.9 16.1 150.0 133.9 16.1

Coke in can 330 22.0 19.6 2.4 25.6 19.6 6.0

Implied prices

per liter

Starbucks while

chocolate mocha

(tall size)

1,000 422.5 377.3 45.3 422.5 377.3 45.3

Coke in can 1,000 66.5 59.4 7.1 77.7 59.4 18.3

Source: DOF staff estimates

Current Proposed

Why not tax coffee-shops instead?• Even with the proposed SSB excise tax, the VAT component of

a Starbucks drink is more than double the combined VAT and excise tax of a Coke in can, assuming equivalent volumes.

8/30/2017 75


Economic cost



Health cost of diabetes• Most people are short-sighted, especially the poor and less

educated, so we need to use public policy to help them. They do not know or factor in well the true cost of SSB.

• In 2015, the government reimbursements on hemodialysis patients totaled to about PHP 7.4 billion to cover 1.1 million patients.

• Each hemodialysis session costs approximately PHP 4,000. PhilHealth covers 90 days of sessions at PHP 2,600/session.

• Depending on the severity of the case, a complete HD for an entire year is typically 120-150 sessions so the costs can go up to PHP 480,000 to 600,000. The patient only gets 90 sessions covered.

• This is considerable wastage for PhilHealth especially on benefit payout for diseases that are preventable with evidence-based and recommended public policy interventions.


Payment

Pneumonia, Moderate Risk 4,828,023,095

Hemodialysis 2,913,825,724

Caesarian Section, Primary 1,383,325,782

Maternity Care Package 1,120,226,800

Normal Spontaneous Delivery 1,047,558,141

Septicemia 961,858,613

Caesarian Delivery 958,933,943

Acute Gastroenteritis 757,952,803

Cerebral Infarction 775,933,363

Urinary Tract Infection 627,364,590

Top 10 benefit paymentsJanuary – June 2017, in pesos

Source: PhilHealth


8/30/2017 79

PhilHealth case rates

Case Subsidy (PHP)

Non-insulin dependent diabetes 2,800

Insulin dependent diabetes with no complications 2,800

Diabetes with complications other than coma or ketosis 12,600

Diabetes with coma or ketosis 15,800

Source: PhilHealth


8/30/2017 80

Health cost of diabetes

Case Day (PHP) Month (PHP) Year (PHP)

Type 2 diabetes 60 1,825 21,900

+ hypertension 26 780 9,360

+ cholesterol 30 900 10,800

+ blood test ~13 ~400 4,800

+ kidney dialysis ~1,000 ~30,000 ~360,000

Total (without complications) 60 1,825 21,900

Total (without dialysis) ~125 ~3,750 ~45,000

Total (with dialysis) ~1,130 ~34,000 ~408,000

Note: Numbers may not fully add up, as the frequencies for each treatment vary (i.e., dialysis is usually held

twice a week, while a blood test is usually help once every two or three months.


Health cost of diabetes

• Monthly maintenance is PHP5,000 or PHP60,000 per year for those taking medicines. This is not affordable for 80 percent of the population. If 5 million are taking medicines, this costs us 300 billion pesos per year.

• Direct cost related to obesity 0.06 to 0.5 percent of GDP and total cost from 1.5 to 9.9 percent of total healthcare expenditure in other countries. We have yet to do this.

• US: Obese people spend 30 percent more than normal people n health care.

• Japan: 9.8 and 22 percent more health spending for overweight and obese respectively.



Economic cost

• From 2011 to 2030, loss in GDP due to diabetes, total USD 1.7 trillion, of which 800 billion in low and middle income country.

• In the Philippines this is expected to grow as the country becomes richer and NCD the main driver of sickness. Economic cost is huge given our young labor force. Instead of being productive, they are sick and waste potential life.



Industry sales will still be strong

• However, industry sales will still be strong due tooHigher disposable income due to lower PIT

oRising middle class

o Fast growing economy (6.5%)

o Fast growing population (1.8%)

oModerate inflation (3%)

o Falling poverty and unemployment

oSubstitute products

• Even sari-sari stores will grow due to the above reasons.



Breakdown of sari-sari store sales


43

31

10

6

0

20

40

60

80

100

Perc

en

t

Share of sari-sari store sales (percent)

Cigarettes

Soft drinks

Food

Laundry

Hygiene

Powdered milk

Others

Source: AC Nielsen


Breakdown of sari-sari store sales


91

9

80

100

Perc

en

t

Retail mix (percent)Sari-sari stores Other retail stores

Source: AC Nielsen


Lessons from the Sin Tax Law

• The imposition of heavy excise taxes on alcohol did not “kill” the industry, contrary to claims of some sectors and groups.o A robust economy and a growing middle class

incentivized alcohol manufacturers to “premiumise” or to create new products that suit the new demand, resulting in growth in the industry (Euromonitor, Alcoholic Drinks in the Philippines, June 2017)

o The SSB excise tax, coupled with increased investments brought about by revenues from tax reform, and middle class expansion due to lower PIT, will incentivize companies to create new, healthier product lines


Lessons from the Sin Tax Law

• Contrary to industry claims that tobacco farmers would face an immediate decline in revenues due to lower cigarette demand, tobacco farming remained strong. Production increased by 4.5% in 2013, and exports expanded by 35% (AER, 2014).



Sari-Sari Store Training and Access to Resources (STAR) program

8/30/2017 88

• The Coca-Cola STAR Program is implemented in partnership with TESDA, where women around the country can enroll and undergo the Basic Entrepreneurship and Gender Sensitivity Training at the TESDA Women’s Center in Taguig City and other STAR Program trainings conducted in the regions.

• The TESDA-COKE STAR Program aims to empower 200,000 women and sari-sari store owners by the year 2020 by giving them skills training in managing their business and since 2016, has already helped around 83,000 owners of sari-sari stores.

• Began in 2014 during then TESDA Director General Joel Villanueva


Financial position of top SSB firms




121.6

76.8

55.3

19.09.1 9.1 8.2 6.1 5.0

0

25

50

75

100

125

150P

HP

bil

lio

ns

Gross revenues of top beverage companies, 2015

Source: SEC



15.6

7.5

0.8

6.2

0.4 0.4 0.9 1.00.1

0

4

8

12

16

20P

HP

bil

lio

n

Net profit of top beverage companies, 2015

Source: SEC


Overall impact on the people



Decile/

percentile

Description

(assumes a family of 5

members)

2018 projected

monthly

household total

income*

Personal

income tax

Value-

added tax

Petrol and

transportationAutomobile** SSB Net tax due

Inflationary

effect***

Change in

take home

pay

Transfer

(full year)

Change in

take home

pay after

transfer

D1 Subsistence poor 5,106 2 -210 -102 -197 -506 -298 -804 2,400 1,596

D2 Subsistence poor 8,250 84 -312 -161 -335 -725 -456 -1,180 2,400 1,220

D3 Poor 10,652 404 -423 -217 -406 -641 -555 -1,197 2,400 1,203

D4 Near poor 12,987 1,063 -563 -276 -507 -283 -639 -922 2,400 1,478

D5 Near poor 15,760 2,377 -895 -365 -595 522 -744 -223 2,400 2,177

D6 Unskilled 19,335 4,127 -1,372 -446 -1,129 1,179 -847 332 332

D7 Partly skilled 24,524 7,684 -1,650 -581 -1,294 4,159 -992 3,167 3,167

D8 Skilled 32,565 13,539 -2,261 -771 -1,418 9,089 -1,183 7,906 7,906

D9 Professional 47,710 25,494 -4,618 -1,091 -2,283 -2,007 15,495 -1,468 14,027 14,027

D10 Middle class 115,428 61,738 -8,835 -2,887 -10,931 -2,670 36,415 -2,620 33,795 33,795

P100 Executive 303,059 118,538 -16,525 -6,284 -87,360 -3,278 5,090 -3,879 1,212 1,212

T1000 CEO 706,017 146,575 -20,672 -7,801 -131,533 -1,962 -15,394 -5,301 -20,695 -20,695

Top taxpayer A 1,376,147 -470,879 -57,562 -15,206 -271,488 -1,505 -816,640 -8,241 -824,881 -824,881

Top taxpayer B 2,752,294 -1,495,740 -120,279 -30,411 -271,488 -1,062 -1,918,980 -12,361 -1,931,341 -1,931,341

***The inflationary effect was computed as a function of income, marginal propensity to consume (MPC), and estimates on the price effect of the increased oil excise on food.

* Total household income includes compensation income, income from entrepreneurial activities (i.e. businesses), and other sources of income (i.e. cash transfers).

**Automobile excise tax impact were computed using 2016 prices, assuming 3 to 5 years of amortization.

Combined effect Package 1 change in annual take home pay (in pesos)

Source: DOF staff estimates using the preliminary Family Income and Expenditure Survey - Labor Force Survey 2015

Notes:

This table is updated as of July 29, 2017. Each household has about two income earners.

Combined tax-transfer effect*



Targeted transfers will be crucial in protecting the poor from

shocks and can help improve the progressivity of the tax reform.


After the tax-transfer reform, the poor benefits the most.



Note: D1 refers to the first deciles or the poorest 10% of households based on the preliminary 2015 Family Income and Expenditure Survey (FIES). Each succeeding decile consists of the next 10% of households based on total household income. The figures above are averages for each decile.

2.61.2 0.9 0.9 1.2

0.11.1

2.0 2.5 2.4

0.0

-0.2

-5.0-5.8

-10

-8

-6

-4

-2

0

2

4

Per

cen

t

Average household

Percent increase in household income



Cross-country experience




8/30/2017 96

Cross-country summary of specific and ad valorem SSB taxes

Source: Grattan Institute and World Health Organization

Country Base Type RatePeso

equivalent

SSB using locally - produced sugar PHP10/ L

Other SSB PHP20/ L

Barbados All SSB Ad valorem 10% PHP 17.09/L

Belgium Soft drinks Specific€0.03 per litre

(1 cent per can)PHP 1.77/ L

Cambodia Soft drinks Ad valorem 10% PHP 4.05/L

Flavored drinks and other non-alcoholic

drinks3%

Soft drinks 5%

Natural and carbonated mineral waters 10%

Dominica All SSB Ad valorem 10% PHP 7.05/L

Philippines Specific

Congo Ad valorem


8/30/2017 97




equivalent

Egypt Carbonated soft drinks Ad valorem 25% PHP 4.46/L

Soft drinks, soda, mineral water, fruit

juices, and other similar drinks5% PHP 4.22/L

Energy drinks 10% PHP 8.44/L

Malaysia Non-alcoholic drinks Ad valorem 10% PHP 2.74/L

Soda25% + 0.77

baht/440 cc

PHP12.00+

PHP2.64/L

Juices20% + 0.37

baht/440 cc

PHP19.47 +

PHP1.27/L

Other drinks20% + 0.37

baht/440 cc

PHP 19.76 +

PHP1.27/L

Fiji All SSB Specific 0.20 cents/L PHP 1.52/L

Laos Ad valorem

Thailand Mixed


8/30/2017 98




equivalent

Soft drinks FIM 0.045/liter PHP 0.44/L

Solid ingredients for drinks FIM 0.34/liter PHP 3.35/ L

Drinks containing added sugar or

sweetened drinks

7.45 euros/

hectoliter PHP4.36/ L

Energy drinks1.00 euros/

hectoliter PHP0.59/ L

Sweetened drinks HUF 7.00/L PHP 1.34/L

Energy drinksHUF 40/L to

250/L

PHP 7.64/L to

47.76/L

Mexico Soft drinks Specific MXN 1.00/L PHP 2.90/ L

USA

(Berkeley,

CA)

All SSB Specific USD 0.35/kg PHP 17.77/L

Samoa Soft drinks Specific WST 0.40/L PHP 10.65/L

Finland Specific

SpecificHungary

France Specific


Practices in other countries

• There are currently no tiered sugary beverage taxes in effect. The closest one is Chile’s, which imposes a higher VAT (18%) on SSBs above 6.25g/100ml.

• There are proposed or upcoming tiered volumetric SSB taxes in the United Kingdom, Ireland, and Portugal. All share the 8g/100ml content as a benchmark for “low-sugar beverages.”




• UK proposal is 3-tier volumetric tax, to be implemented this 2018.

Tier 1: 0 < 5g caloric sweetener/100ml = Exempted

Tier 2: 5g to 10g caloric sweetener/100ml = PHP 11.6/liter

Tier 3: > 8g caloric sweetener/100ml = PHP 15.5/liter

• In 2011, Hungary implemented a 2-tiered volumetric SSB tax.

<25% fruit content and > 8g added sugar/100ml = PHP 1.27/liter

Otherwise = exempted



Why the 8g/100ml of added sugar threshold?

• Sugar content varies greatly both across beverage categories and within them. A typical sugar sweetened soda, for example, contains almost 30 grams of sugar (about 7 teaspoons) per eight-ounce serving.


Sugar content of

sugar-sweetened

beverages, 2014

Minimum(grams per

8oz serving)

Maximum(grams per

8oz serving)

Mean(grams per

8oz serving)

Regular soda 8 48 29

Fruit drinks 1 57 22

Sports drinks 5 14 12

Ready-to-drink tea 5 28 15

Energy drinks 1 33 19

Flavored water 4 13 10

Ready-to-drink coffee 2 28 16

Source: Rudd Center for Food Policy and Obesity, 2014, Sugary Drink FACTS 2014;

author’s calculations



• A “grace period” or a period from the announcement of proposals to implementation comes with the tiered volumetric system. This allows industry to adjust the sugar content of its products.

• There is no tiered SSB tax in Singapore, contrary to what the BIAP position asserts. Instead of introducing an excise tax, a healthy choice campaign was initiated to classify carbonated soft drinks using 0-7 grams per 100 ml threshold.





Country Treatment of milk products

Mexico Milk and dairy products are exempted

United Kingdom Exempts “milk-based” beverages and natural fruit juices

Philadelphia, USA Products with at least 50% milk content are exempt

France Flavored milk are taxed

Nauru Flavored milk are taxed


Sugar and HFCS



Source: Sugar Regulatory Administration

Value chain of Philippine sugar industry


Bulk of local sugar consumption come from industries.



Aggregate demand for sugar

sweeteners, by type (2014)

Share of

total (%)

Low (metric

tons)

Export 16 363,678

Domestic 84 1,941,218

Households 21 480,646

Institutions 4 97,301

Beverage Industry 34 776,487

Other Industries 25 586,784

Total 100 2,304,896


Bulk of local sugar consumption come from industries.



Demand for sugar substitutes is high among households.


Consumption

(in metric

tons)

Per capita (in

kilograms)

Consumption

(in metric

tons)

Per capita (in

kilograms)

Households 302,851 3.05 482,871 4.87

Business 11,997 0.12 20,822 0.21

Industry 35,507 0.36 51,934 0.52

Total demand 350,355 3.53 555,627 5.6


Lower estimates Higher estimate

Consumer

type

Aggregate demand for sugar substitutes by type of consumer (2014)


Domestic sugar production


Raw sugar production 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Total production

(Metric Tons)

2,244,131 2,465,116 2,461,808 2,323,817 2,238,872

Increase/Decrease 10% 0% -6% -4%

Total Area (Hectares) 422,384 424,132 423,333 416,893 413,435

Yield per Hectare (LKg/Ha) 106.26 116.24 116.31 111.48 108.31

Raw sugar domestic withdrawals

(consumption)

2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Total (Metric Tons) 2,029,866 2,184,512 2,202,443 2,240,682 2,159,976

Increase/Decrease 8% 1% 2% -4%

Refined sugar production 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Total (in 50 kg-Bag) 18,723,731 21,097,909 20,687,713 21,527,634 19,146,629

Increase/Decrease 13% -2% 4% -11%

Refined sugar withdrawals

(consumption)

2011-2012 2012-2013 2013-2014 2014-2015 2015-2016

Total (in 50 kg-Bag) 18,897,432 20,495,655 22,318,709 20,166,002 17,578,307

Increase/Decrease 8% 9% -10% -13%


There is an increasing trend in HFCS importation.



In 2016, 1.3 billion kg of sugar and confectionaries was imported

valued at 24.3 billion pesos.


HS4Net mass (in

billion kilograms)

Value (in

billion PHP)Description

1701 0.24 4.98 Cane or beet sugar and chemically pure sucrose, in solid form

1702 0.58 13.1

Sugars, including lactose, maltose, glucose or fructose in solid

form; sugar syrups without added flavouring or colouring

matter; artificial honey, whether or not mixed with natural

honey; caramel

1703 0.50 3.2 Molasses; resulting from the extraction or refining of sugar

1704 0.04 3.1sugar confectionery (including white chocolate), not

containing cocoa

Total 1.36 24.4

Source: Bureau of Customs


Revenue estimates and methodology



Comparison of estimated revenue collection


Comparison of 2018 revenue from SSB excise tax

in billion

PHP

HB 292

PHP10/liter

Lower rate

PHP5/liter

Sugar content

PHP0.05/gram

of sugar

Sugar content

PHP0.10/gram

of sugar

Excise 41.93 22.84 24.84 43.97

VAT 5.03 2.74 2.98 5.28

TOTAL 46.96 25.58 27.82 49.24

Source: DOF staff estimates (as of August 11, 2017)

Note: Estimates also exclude artificial sweetened SSBs.


8/30/2017 114

Estimated revenue impactbased on PHP10/liter

2018 2019 2020 2021 2022

Excise 33.7 35.4 37.1 39.0 40.9

VAT 4.0 4.2 4.5 4.7 4.9

Total 37.7 39.6 41.6 43.7 45.8

Excise 3.4 3.6 3.8 3.9 4.1

VAT 0.4 0.4 0.5 0.5 0.5

Total 3.8 4.0 4.2 4.4 4.6

Excise 1.8 1.9 2.0 2.1 2.2

VAT 0.2 0.2 0.2 0.3 0.3

Total 2.1 2.2 2.3 2.4 2.5

Excise 3.0 3.2 3.3 3.5 3.6

VAT 0.4 0.4 0.4 0.4 0.4

Total 3.4 3.5 3.7 3.9 4.1

Excise 41.9 44.0 46.2 48.5 51.0

VAT 5.0 5.3 5.5 5.8 6.1

TOTAL 47.0 49.3 51.8 54.4 57.1 Source: DOF staff estimates (as of May 5, 2017)

SSB typeEstimated incremental revenues (in billion PHP)

Softdrinks

Energy drinks

Sweetened tea

Fruit drinks

Grand total


Estimated revenue impactbased on PHP5/liter


2018 2019 2020 2021 2022

Excise 18.2 19.1 20.1 21.1 22.2

VAT 2.2 2.3 2.4 2.5 2.7

Total 20.4 21.4 22.5 23.6 24.8

Excise 1.9 2.0 2.1 2.2 2.3

VAT 0.2 0.2 0.2 0.3 0.3

Total 2.1 2.2 2.3 2.4 2.6

Excise 1.0 1.1 1.1 1.2 1.2

VAT 0.1 0.1 0.1 0.1 0.1

Total 1.1 1.2 1.2 1.3 1.4

Excise 1.7 1.8 1.9 2.0 2.1

VAT 0.2 0.2 0.2 0.2 0.3

Total 1.9 2.0 2.1 2.2 2.4

Excise 22.8 24.0 25.2 26.4 27.8

VAT 2.7 2.9 3.0 3.2 3.3

TOTAL 25.6 26.9 28.2 29.6 31.1

Source: DOF staff estimates (as of May 5, 2017)

Note: Computations does not include artificially sweetened SSBs.

Energy Drinks

Sweetened Tea

Fruit Drinks

Grand Total


Softdrinks


Estimated revenue impactbased on sugar content: PHP 0.10/gram


2018 2019 2020 2021 2022

Excise 36.2 38.0 39.9 41.9 44.0

VAT 4.3 4.6 4.8 5.0 5.3

Total 40.5 42.6 44.7 46.9 49.3

Excise 3.5 3.7 3.9 4.1 4.3

VAT 0.4 0.4 0.5 0.5 0.5

Total 3.9 4.1 4.3 4.5 4.8

Excise 1.3 1.4 1.5 1.5 1.6

VAT 0.2 0.2 0.2 0.2 0.2

Total 1.5 1.6 1.6 1.7 1.8

Excise 3.0 3.1 3.3 3.4 3.6

VAT 0.4 0.4 0.4 0.4 0.4

Total 3.3 3.5 3.7 3.8 4.0

Excise 44.0 46.2 48.5 50.9 53.4

VAT 5.3 5.5 5.8 6.1 6.4

TOTAL 49.2 51.7 54.3 57.0 59.9



Summary by SSB type - PHP 0.10 per gram of sugar


Softdrinks

Energy Drinks

Sweetened Tea

Fruit Drinks

Grand Total


Estimated revenue impactbased on sugar content: PHP 0.05/gram

2018 2019 2020 2021 2022

Excise 19.8 20.8 21.8 22.9 24.0

VAT 2.4 2.5 2.6 2.7 2.9

Total 22.2 23.3 24.4 25.6 26.9

Excise 2.0 2.1 2.2 2.3 2.4

VAT 0.2 0.3 0.3 0.3 0.3

Total 2.2 2.3 2.5 2.6 2.7

Excise 0.7 0.7 0.8 0.8 0.8

VAT 0.1 0.1 0.1 0.1 0.1

Total 0.8 0.8 0.9 0.9 1.0

Excise 1.7 1.8 1.9 2.0 2.1

VAT 0.2 0.2 0.2 0.2 0.2

Total 1.9 2.0 2.1 2.2 2.3

Excise 24.2 25.4 26.7 28.0 29.4

VAT 2.9 3.0 3.2 3.4 3.5

TOTAL 27.1 28.4 29.9 31.3 32.9



Sweetened Tea

Fruit Drinks

Grand Total

Summary by SSB type - PHP 0.05 per gram of sugar


Softdrinks

Energy Drinks



Estimated revenue impactPHP5/liter (2018, 2019); PHP 0.05/g of sugar (2020 onwards)

PHP2.5/liter for artificially sweetened SSBs


2018 2019 2020 2021 2022

Concentrates

Powder Concentrates

Excise 12.90 12.83 3.28 3.33 3.40

VAT 1.55 1.54 0.39 0.40 0.41

Total 14.45 14.37 3.67 3.73 3.80

Liquid Concentrates

Excise 0.93 0.93 0.74 0.74 0.73

VAT 0.11 0.11 0.09 0.09 0.09

Total 1.04 1.04 0.83 0.83 0.82

Excise 13.84 13.76 4.02 4.07 4.13

VAT 1.66 1.65 0.48 0.49 0.50

Total 15.50 15.41 4.50 4.56 4.63

Total for Concentrates

Type of SSBEstimated incremental revenues (in billion PHP)

2018 2019 2020 2021 2022

Excise 17.69 18.47 21.32 22.26 23.24

VAT 2.12 2.22 2.56 2.67 2.79

Total 19.81 20.68 23.88 24.93 26.03

Excise 1.92 2.00 2.26 2.36 2.46

VAT 0.23 0.24 0.27 0.28 0.30

Total 2.15 2.24 2.53 2.64 2.75

Excise 1.00 1.05 0.78 0.81 0.85

VAT 0.12 0.13 0.09 0.10 0.10

Total 1.12 1.17 0.87 0.91 0.95

Excise 1.80 1.88 1.97 2.06 2.15

VAT 0.22 0.23 0.24 0.25 0.26

Total 2.02 2.10 2.21 2.31 2.41

Excise 0.40 0.22 0.23 0.24 0.25

VAT 0.05 0.03 0.03 0.03 0.03

Total 0.45 0.25 0.26 0.27 0.28

Total for RTD SSBs

Excise 22.81 23.61 26.56 27.72 28.94

VAT 2.74 2.83 3.19 3.33 3.47

Total 25.55 26.45 29.75 31.05 32.41

RTD SSBs

Artificial

Softdrinks

Energy drinks

Sweetened tea

Fruit drinks

Type of

SSB

Estimated incremental revenues (in billion PHP)

Source: DOF staff estimates

Note: Milk and powdered 3-in-1 coffee not included in this estimation.


Estimated incremental revenues, by company

PHP 10/liter


2018 2019 2020 2021 2022

Coca-Cola Export Corp, The

Excise 19.97 20.96 22.01 23.11 24.27

VAT 2.40 2.52 2.64 2.77 2.91

Total 22.36 23.48 24.65 25.89 27.18

Pepsi-Cola Products Philippines Inc

Excise 11.91 12.51 13.14 13.79 14.48

VAT 1.43 1.50 1.58 1.66 1.74

Total 13.34 14.01 14.71 15.45 16.22

Zest-O Corp

Excise 1.23 1.29 1.35 1.42 1.49

VAT 0.15 0.15 0.16 0.17 0.18

Total 1.38 1.44 1.52 1.59 1.67

Asiawide Refreshments Corp

Excise 3.35 3.52 3.70 3.88 4.08

VAT 0.40 0.42 0.44 0.47 0.49

Total 3.76 3.94 4.14 4.35 4.57

Asia Brewery Inc

Excise 1.82 1.91 2.00 2.10 2.21

VAT 0.22 0.23 0.24 0.25 0.27

Total 2.04 2.14 2.24 2.36 2.47

Company name Estimated incremental revenues (PHP)

Source: DOF staff estimates Note: Based on PHP10/liter tax


Estimated incremental revenues, by company

PHP 10/liter

2018 2019 2020 2021 2022

Universal Robina Corp

Excise 1.54 1.61 1.69 1.78 1.87

VAT 0.18 0.19 0.20 0.21 0.22

Total 1.72 1.81 1.90 1.99 2.09

Del Monte Philippines Inc

Excise 1.10 1.16 1.21 1.27 1.34

VAT 0.13 0.14 0.15 0.15 0.16

Total 1.23 1.29 1.36 1.43 1.50

Cosmos Bottling Corp

Excise 0.73 0.77 0.81 0.85 0.89

VAT 0.09 0.09 0.10 0.10 0.11

Total 0.82 0.86 0.91 0.95 1.00

Cenmaco Inc

Excise 0.15 0.16 0.17 0.18 0.19

VAT 0.02 0.02 0.02 0.02 0.02

Total 0.17 0.18 0.19 0.20 0.21

RFM Corp

Excise 0.13 0.13 0.14 0.15 0.15

VAT 0.02 0.02 0.02 0.02 0.02

Total 0.14 0.15 0.16 0.16 0.17

Grand Total

Excise 41.93 44.03 46.23 48.54 50.97

VAT 5.03 5.28 5.55 5.82 6.12

Total 46.96 49.31 51.77 54.36 57.08


Company name Estimated incremental revenues (PHP)


Note: Based on PHP10/liter tax


Estimated revenue impactPHP 10/liter and PHP 5/liter

Proposal: HB 292

Tax rate: PHP10 per liter

in billion PHP 2018 2019 2020 2021 2022

Excise 41.93 44.03 46.23 48.54 50.97

VAT 5.03 5.28 5.55 5.82 6.12

TOTAL 46.96 49.31 51.77 54.36 57.08



*Estimates for the proposed two-tier SSB excise structure was not included since

information on the breakdown (ratio) of local and imported sugar used for SSB

products is not available.


Proposal: Lower volumetric rate

Tax rate: PHP5 per liter

in billion PHP 2018 2019 2020 2021 2022

Excise 22.84 23.98 25.18 26.44 27.76

VAT 2.74 2.88 3.02 3.17 3.33

Total 25.58 26.86 28.20 29.61 31.09

Proposal: Based on sugar content

Tax rate: Php 0.05 per gram of sugar

in billion PHP 2018 2019 2020 2021 2022

Excise 24.84 26.08 27.39 28.76 30.19

VAT 2.98 3.13 3.29 3.45 3.62

Total 27.82 29.21 30.67 32.21 33.82


Note: PHP 0.05/gram of sugar is the average tax rate equivalent to the PHP 5/liter excise tax.


8/30/2017 122

Estimated revenue impactPHP 0.10/gram and PHP 0.05/gram



in billion PHP 2018 2019 2020 2021 2022

Excise 24.18 25.39 26.66 27.99 29.39

VAT 2.90 3.05 3.20 3.36 3.53

Total 27.08 28.43 29.85 31.35 32.92


Note: PHP 0.05/gram of sugar is the average tax rate equivalent to the PHP 5/liter excise tax.

Estimates also exclude artificial sweetened SSBs.



in billion PHP 2018 2019 2020 2021 2022

Excise 43.97 46.16 48.47 50.90 53.44

VAT 5.28 5.54 5.82 6.11 6.41

Total 49.24 51.70 54.29 57.00 59.85




Estimated revenue impactPHP5/liter (2018, 2019); PHP 0.05/g of sugar (2020 onwards)

PHP2.5/liter for artificially sweetened SSBs


Type of SSB 2018 2019 2020 2021 2022

RTDs

Excise on RTD SSBs 22.8 23.6 26.6 27.7 28.9

VAT on RTD SSBs 2.7 2.8 3.2 3.3 3.5

Total 25.5 26.4 29.7 31.1 32.4

Excise on Concentrates 13.8 13.8 4.0 4.1 4.1

VAT on Concentrates 1.7 1.7 0.5 0.5 0.5

Total 15.5 15.4 4.5 4.6 4.6

Excise tax revenue 36.65 37.37 30.58 31.80 33.07

VAT revenue 4.40 4.48 3.67 3.82 3.97

TOTAL 41.04 41.85 34.25 35.61 37.04

Estimated incremental revenues (in billion PHP)

GRAND TOTAL

Concentrates


8/30/2017 124

1. Compute for the new selling price per liter of SSB products, by computing for the base price per liter (or price per liter before the 12 percent value added tax (VAT) of each SSB).

2. Apply the proposed excise tax rate of PHP10 to the computed base price per liter, and multiply by the 12 percent VAT. With the new selling price per liter, compute the increase or change of price per liter from the old selling price.

3. Determine the estimated 2018 volume of demand by multiplying 2017 volume to the percent increase in price and corresponding elasticities.

4. Compute for the incremental revenue on excise and VAT, by applying the proposed excise rate to the estimated 2018 volume demand for each SSB product.

5. Compute for the incremental VAT collection by multiplying the 12 percent VAT to the estimated revenue from the proposed excise tax.

Methodology


8/30/2017 125

Assumptions used in estimating the revenue impact

• Datao 2015 Euromonitor data on the volume of sales in liters of SSBs

o Suggested retail price of SSBs based on supermarket survey conducted by DOF staff

• Assumptionso Elasticities

o Income elasticity: 1.58 (across the board) based from DOF computation

o Growth rate: 5 percent (based on average growth rate of SSB sales (2010 to 2015)

Source: 1/ DOF staff estimates ; 2/ Andreyeva, et.al (2010)

Type of SSB Elasticity

Soft drinks (Caffeine) 1/ - 0.77

Non-Soft drinks (Non-caffeine) 2/ -1.0


Related literature on SSB elasticity estimates


Source: Cabrera Escobar, et. al. 2013. Evidence that a tax on sugar sweetened beverages reduces the obesity rate: a meta-

analysis. BioMed Central Public Health.


Responding to critiques



Position of various stakeholders on SSB excise tax

Argument DOF response

1. Is there really a negative

externality? De Dios

Poor and youth have assymetric info. They

do not know the effects of increased SSB

consumption in the long-run.

The negative externatility is that when they

are older they allocate more money for

maintenance, when undergo analysis –

productive time is wasted

2. UAP study Thu study must address the following

methodological issues:

1. Mis-specification

2. Did not account for the income effect



DOF response to BIAP positionBIAP position DOF response

Hurt lower income families

The proposed SSB tax on products

commonly purchased by majority of

Filipinos, particularly those in the lower

socio-economic classes, will make items

like coffee, juice, and soft drinks more

expensive.

These products are non-essential and

have health risks, and thus their

consumption is not encouraged. We

do not tell our children to consume

these products every day because they

are unhealthy.

To illustrate, the price increase of the

products, ordinarily purchased by the

most vulnerable segment of our society

like 3-in-1 coffee and powdered juices,

will be as high as 40% and 200%

respectively.

We are open to reviewing the tax

coverage and the rates for some

products. For 3-in-1 coffee, it is far

cheaper to simply buy the ingredients

and mix personally (7 pesos vs 3.3

pesos). 3-in-1 coffee has 12.5 grams

or 3 teaspoons of sugar, way too much.

Those who take brewed coffee do not

put 3 teaspoons of sugar in their

coffee. 9/27/2016 DEPARTMENT OF FINANCE 129



Approximately 80% of beverage

consumers are from the lower

socioeconomic levels.

Not accurate. Per the 2015 Family

Income and Expenditure Survey (FIES),

the top 3 deciles account for more

than 50% of SSB consumption. The

FIES is better than market surveys in

analyzing these issues.

Moreover, higher income families have

more money, and they spend much

more: 2,2,300 pesos for first decile vs

26,800 pesos for tenth decile, in annual

spending on SSB per family.

84% of beverage sales are made through

1 million sari-sari stores

While this may be true, this figure is

likely to be smaller when computed

based on value, as supermarkets and

restaurants price SSB way higher.




Approximately 40% of sari-sari store

income comes from beverage

Per data from FEMSA, almost 70% of

sari-sari stores’ sales are not SSB, and

with higher take home pay from the

personal income tax reduction,

consumers can purchase more SSB and

non-SSB. It is high time sari-sari store

also diversify their products towards

healthier options.

Significantly harm the economy

PHP 10 to 20 per liter excise tax will

translate into a VAT equivalent from 12%

to 55-95%. Additionally, in the proposed

SSB tax, the PHP 10 per liter is equivalent

to PHP 100 per kilogram of sugar, which

is 20 times bigger than the Department

of Finance’s initial proposal.

DOF does not support the 20-peso tax.

The VAT equivalent is not accurate.

Since the VAT is 12% flat, how can that

lead to 95% (an exaggeration). The

current proposal on SSB cannot be

compared with the original proposal

on sugar. Please look at the rationale

for each type of tax.




The proposed SSB tax rate would be 5

times that of Mexico, 16 times that of

Thailand, and 9 times that of France –

countries that have more developed

economies than ours.

These countries are richer and have the

ability to pay for their healthcare and

other national priorities. For the

Philippines, we cannot afford so we

have to take serious preventive

measures.

The beverage industry has a combined

annual revenue of approximately PHP 170

billion. According to the Department of

Finance, the government estimates that

they will raise PHP 47 billion from the

sweetened beverage tax, which is nearly

30% of the industry’s combined annual

revenue.

While this may be true, the sin tax also

raised the excise tax far higher than

revenues, so this is not unique, but

more importantly, lower income taxes

a fast-growing economy, and product

diversification should ensure growing

demand for these products.




For the industry, the price increase would

cause SSB volumes to decline between

33% and 75% shifting volume to informal

beverages that are unregulated.

This is very unlikely as income effect is

not factored in, as in the BIAP

commissioned UAP study. Please also

consider that the following will

increase demand:

1. Fast growing economy

2. Fast growing population

3. Falling poverty

4. Rising income and employment

5. Lower income taxes

6. Product diversification

As the economy grows, more informal

establishments will be taxed.




This will substantially reduce sugar

purchases adversely affecting sugar

farmers

60% of sugar is used commercially to

produce products and only 34% is used

for SSB, and imported high fructose

corn syrup (HFCS) is actually the main

ingredient is most SSB so the industry

cannot use farmers as shield.

Withdrawals of refined sugar decline

as HFCS imports increase, even if

refined sugar consumption trends are

still rising. In fact, the sugar bloc in the

lower house voted for the SSB tax.

Moreover, funds are being earmarked

for the sector to promote their interest

(around 7 billion pesos annually).




The proposed SSB could imperil over

130,000 direct and indirect jobs across all

business activities of the beverage

industry.

This is unlikely as even before SSB tax

was proposed, there are plans to shift

from labor to capital production. In

Mexico, the SSB tax was conveniently

used as excuse to cut jobs. Moreover,

the following will increase demand:

1. Fast growing economy

2. Fast growing population

3. Falling poverty

4. Rising income and employment

5. Lower income taxes

6. Product diversification




The resulting drop in business volume

and job losses will lead to the reduction

of tax collection from corporate income,

personal income, and value added tax.

This will offset any expected revenue

from the SSB tax.

Based on above explanation, this

drastic fall in taxes is an exaggeration.

Please also consider the macro and

income effect when projecting

demand. These are conveniently not

included in the BIAP-commissioned

UAP study.

This proposed tax will inevitably dissuade

local and international investors.

Investors who come to the country do

not base their decision on SSB tax. In

fact, more investors will come in after

tax reform is passed the ‘Build Build

Build’ is implemented.




Not addressed the issue of obesity and

diabetes in the Philippines

There is no local study that directly

correlates sweetened drinks as direct

causative factors to diabetes or obesity.

Humans are humans everywhere in the

planet. All are homo sapiens. There is

no compelling need to have a local

study. But we will endeavor to have

one.

In fact, 28 million Filipinos are under-

nourished, and this public health problem

has negative implications to health like

insulin resistance, dyslipidemia and

others.

On the other side, there are 31 million

over-nourished Filipinos, 1 million

dialysis patients, and up to 5 million

diabetics, spending over 300 billion

pesos per year in health. But more

importantly, we do not tell these

under-nourished Filipinos to take more

SSB so they can be healthier.




The proposed tax is discriminatory. It

applies to a single category, manufactured

and pre-packaged beverages, when in fact,

there are other categories that contribute to

obesity and diabetes.
















BIAP position DOF response

The proposed tax is discriminatory. It

applies to a single category, manufactured

and pre-packaged beverages, when in fact,

there are other categories that contribute to

obesity and diabetes.

For a non-essential with adverse health

effect, this is the right public policy. This

is also done in other products like

alcohol, tobacco, oil, mining, coal, etc.

SSBs account for just 2.1% of daily food

intake in the Philippines.

This is not accurate. The NNS show the

following:

Sugar and syrup: 1.4%

Miscellaneous which mostly cover SSB:

4%

Milk and milk products: 5.3%

Total: 10.7%, way above the 5%

recommended by WHO for healthy

living. Note also that given our “instant”

lifestyle, falling ‘sugar and syrup’ and

being offset by rising purchase of SSB.

The incidence of obesity and overweight is

prevalent in the higher income classes,

whereas the proposed tax will mostly affect

those in the lower socioeconomic segment.

Not accurate. The incidence of SSB

purchase is much higher among the

upper deciles. In fact, the top 3 deciles

account for over 50% of SSB.



This will substantially reduce sugar

purchases adversely affecting sugar

farmers
















BIAP position DOF response

80% of beverages is consumed by the lower

income classes – those who are the least affected

by obesity and diabetes.

Not accurate. Per the 2015 Family Income and

Expenditure Survey (FIES), the top 3 deciles

account for more than 50% of SSB

consumption. The FIES is better than market

surveys in analyzing these issues.

Moreover, higher income families have more

money, and they spend much more: 2,2,300

pesos for first decile vs 26,800 pesos for tenth

decile, in annual spending on SSB per family.

Sugar is indispensable in meal planning and food

production. According to the FNRI, the Philippine

mean daily per capita of sugar and syrup

consumption in 2013 was 12 grams, which is

compliant with the new World Health

Organization’s guideline recommending a

consumption level of free sugars of less than 50

grams.

This is not accurate. The NNS show the

following:

Sugar and syrup: 1.4%

Miscellaneous which mostly cover SSB: 4%

Milk and milk products: 5.3%

Total: 10.7%, way above the 5% recommended

by WHO for healthy living. Note also that

given our “instant” lifestyle, falling sugar and

syrup and being offset by rising purchase of

SSB.

The promotion of an active lifestyle is more

effective measure in curbing obesity and diabetes

than taxing a particular food or beverage

Studies show that this is necessary but not

sufficient. Both tax and non-tax measures are

needed.


Why did Denmark and Finland repeal their SSB tax?

DENMARK

• The weak tax administration was the primary reason why Denmark’s excise

tax on soft drinks failed.

• This resulted in leakages in the system. There were rampant illegal soft

drink sales and people tend to cross the border to buy cheaper soft drinks

from other countries such as Germany, which does not impose excise tax

on SSB.

FINLAND

• The excise tax imposed on soft drinks remains in force in Finland, while,

the excise tax imposed on sweets, i.e. candy and chocolates, was

abolished by the Finnish government following the pressure from the

European Commission.



Claim: Taxing sugary beverages will not solve the obesity and diabetes problem.

• Sugary beverages are a major contributor to obesity and diabetes, and their consumption must be reduced using a variety of initiatives, including taxes (WHO 2015, World Cancer Research Fund International 2015).

• Taxation is one of the most effective ways to reduce sugary beverage consumption because they reach the entire population and are easily implemented, requiring way fewer resources than they produce (Escobar 2013, Long, Gortmaker, et. al.)



Claim: The body needs sugar for energy.

• While this is true, the body does not need the added sugar from SSBs. SSBs are a major source of discretionary calories (a.k.a unnecessary calories) in a person’s daily diet.

• As healthier source of sugar can come from core foods such as rice, pasta, etc.

• Justifying that SSBs are a viable substitute to provide energy is a poor excuse to meet the dietary requirements of an individual; and as such, effectively denying a person’s right to nutritious and safe food in order to be healthy and productive adults (DOH position paper on SSB).



Claim: Lifestyle must be regulated, not taxed.

• There is a growing evidence that when taxation policies are implemented alongside other policies (e.g., subsidy and regulatory policies), there is considerable potential for promoting healthier diets, and is an effective mechanism to reduce potential substitution for unhealthier options.

• Steps are being initiated to develop complementary non-tax measures to protect the health gains of SSB tax.



Sugar content and potential price changes of common SSBs


Manufacturer:The Coca-Cola Company

Product: Coke regular

(330mL)


Sugar content: 34.5g or 21.7ml

Sugar content per ml volume:

6.6 percent

Current

price (PHP)

Estimated new

price (PHP)

Percent

increase

22.0 25.6 16.9

Serving size 330mL

Servings per

container

1

Calories 138 kcal

Total fat 0g

Protein 0g

Total carbohydrates 34.5g

Sugar 34.5g

Sodium 16mg


Manufacturer:The Coca-Cola Company

Product: Coke regular

(1,750mL)

Current

price (PHP)

Estimated new

price (PHP)

Percent

increase

41.1 60.7 47.7

Serving size 240mL

Servings per

container

About 6

Calories 100 kcal

Total fat 0g

Protein 0g

Total carbohydrates

Sugar

25g

25g

Sugar content: 175g or 110ml


6.3 percent


What will happen if you boil soft drinks?


Source: Youtube

Manufacturer:Interbev Philippines Inc.

Product: Cobra Energy Drink

(350mL)


Current

price (PHP)

Estimated new

price (PHP)

Percent

increase

19.5 23.4 20.1

Serving size 240mL

Servings per

container

1.5

Calories 180 kcal

Total fat 0g

Protein 0g

Total carbohydrates 46 g

Sugar 46g

Sodium 50mg



12.4 percent

Manufacturer:Pepsi-Cola Products

Philippines

Product: Sting – Strawberry Flavor

(330mL)


Current

price (PHP)

Estimated new

price (PHP)

Percent

increase

17.0 20.7 21.7

Serving size 330mL

Servings per

container

1

Calories 130 kcal

Total fat 0g

Protein 0g

Total carbohydrates 33g

Sugar 33g

Sodium 106mg



6.3 percent

Manufacturer:Zesto Corporation

Product: BIG 250 Orange Juice

(250mL)


Current

price (PHP)

Estimated new

price (PHP)

Percent

increase

6.0 8.8 46.7

Serving size 250mL

Servings per

container

1

Calories 100 kcal

Total fat 0g

Protein 0g


Sugar 25g

Sodium 25mg



6.3 percent

Manufacturer:Universal Robina Corp.

Product: C2 – Green Tea Apple

Flavor (355mL)


Current

price (PHP)

Estimated new

price (PHP)

Percent

increase

15.8 19.7 25.2

Serving size 200mL

Servings per

container

About 2

Calories 100 kcal

Total fat 0g

Protein 0g


Sugar 25g

Sodium 35mg



8.2 percent

Manufacturer:Coca-Cola FEMSA,

Philippines, Inc.

Product: Minute Maid Fresh Orange

Juice Drink (250mL)


Current

price (PHP)

Estimated new

price (PHP)

Percent

increase

12.1 14.9 23.1

Serving size 250mL

Servings per container 1

Calories 76 kcal

Total fat 0g

Protein 0g


Sugar 19g

Sodium 77mg



4.8 percent

Manufacturer:Pepsi-Cola Products

Philippines

Product: Gatorade Sports Drink

Blue Bolt (500mL)


Current

price (PHP)

Estimated new

price (PHP)

Percent

increase

24.7 28.7 16.1

Serving size 200mL

Servings per container 2.5

Calories 50 kcal

Total fat 0g

Protein 0g


Sugar 12g

Sodium 90mg



3.8 percent

Manufacturer:Nestle Philippines, Inc.

Product: Nescafe Blend & Brew

(20g pack)


Current

price (PHP)

Estimated new

price (PHP)

Percent

increase

4.6 6.3 36.5

Serving Size 20g or 150ml

Servings Per

Container

1

Calories 89 kcal

Total Fat 2.1g

Saturated Fat 1.9g

Cholesterol 0.5mg

Protein 0.4g

Total Carbohydrates 17g

Sugar 12.5g

Sodium 49mg

Sugar content: 12.5g or 8ml


3.9 percent

Manufacturer:Mondelez International

Product: Tang Orange (25g pack)


Current

price

(PHP)

Estimated

new price

(PHP)

Percent

increase

9.0 19.2 113.7

Serving size 5g or 200ml


Calories 20 kcal

Total fat 0g

Protein 0g


Total sugar 3g

Dietary fiber <1 g

Sodium 40mg



0.9 percent

Manufacturer:Nestle Philippines, Inc.

Product: Nestea Lemon Blend Iced Tea (25g pack)


Current

price (PHP)

Estimated new

price (PHP)

Percent

increase

9.5 19.7 107.2

Serving size 5g


Calories 19 kcal

Total fat 0g

Protein 0.08g

Total carbohydrates 4.7g

Sugar 3.9g

Sodium 2mg



1.2 percent


Nestea litro pack Two 500ml Nestea bottles

Current price (PHP) 8.0 38 = 19 x 2

Estimated new price

(PHP)19.2 49.2 = 24.6 x 2

Percent increase 140 29.5

• Litro packs are primarily consumed at home, where water costs almost zero.

• When compared to pre-packaged bottles, litro packs still represent significant

savings, despite the substantially larger price increase as a percent of SRP.

Manufacturer:Magnolia

Product: Fresh milk (250 ml)


Current

price

(PHP)

Estimated

new price

(PHP)

Percent

increase

36.25 43.4 19.72

Serving size 250ml


Calories 170 cal

Total fat 9g

Protein 9g

Total carbohydrates

Sugar

12g

12g

Sodium 125mg

Cholesterol 31 mg

Potassium 400 mg



3.2 percent

Manufacturer:Selecta

Product: Fortified milk (245 ml)


Current

price

(PHP)

Estimated

new price

(PHP)

Percent

increase

23.10 28.67 24.12

Serving size 245ml


Calories 140 cal

Total fat 8g

Protein 8g


Dietary fiber

Sugar

2 g

14 g

Sodium 120 mg

Cholesterol 30 mg

Potassium 400 mg



2.3 percent

Manufacturer:Nestle

Product: Milo (180 ml)


Current

price

(PHP)

Estimated

new price

(PHP)

Percent

increase

21.50 26.88 25

Serving size 180ml


Calories 132 cal

Total fat 4.4 g

Protein 4 g

Total carbohydrates

Sugars

19 g

14.4 g

Sodium 118 mg

Cholesterol 3 mg

Potassium 400 mg

Sugar content: 14.4 g or 9ml


5 percent


Summary price impact




Price impact of PHP10/liter taxper container (1/4)


Source:

DOF staff

estimates

Proposal

Non-concentrates (RTD SSBs),

per container

Old price

(in PHP)Excise VAT

New price

(in PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

(grams)

Coca-Cola 330ml can 22.0 3.3 2.7 25.6 17 24 35

Pepsi 330ml can 21.5 3.6 2.7 25.5 18 25 41

Mountain Dew 355ml can 21.5 3.6 2.7 25.5 18 25 46

Sprite 355ml can 22.2 3.6 2.8 26.1 18 24 38

Royal Tru-Orange 330ml can 22.2 3.3 2.8 25.8 17 23 32

RC Cola 355ml plastic bottle 22.1 3.6 2.8 26.1 18 24 42

Sparkle 355ml glass bottle 12.0 3.6 1.7 16.0 33 33 46

7-Up 355ml can 22.2 3.6 2.8 26.1 18 24 37

Pop Cola 240ml glass bottle 8.0 2.4 1.1 10.7 34 33 45

Sarsi 240ml glass bottle 8.0 2.4 1.1 10.7 34 33 45

Mirinda 330ml can 24.5 3.3 3.0 28.2 15 22 36

Pepsi Max 330ml plastic bottle 21.5 3.3 2.7 25.2 17 24 0

Coca-Cola Zero 355ml can 22.8 3.6 2.9 26.7 17 24 0

Coca-Cola Light 355ml can 22.8 3.6 2.9 26.7 17 24 0

Coca cola Light 1.5L bottle 47.5 15.0 6.9 64.3 35 34 162

Coca Cola 1L bottle 31.0 10.0 4.5 42.2 36 34 108

Pepsi Max 1.5L bottle 46.5 15.0 6.8 63.3 36 34 0

Sprite Zero 330ml can 22.2 3.3 2.8 25.8 17 23 0

PHP 10/liter




Proposal


per container

Old price

(in PHP)Excise VAT

New price

(in PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

(grams)

Cobra 350ml plastic bottle 19.5 3.5 2.5 23.4 20 26 69

Gatorade 355ml plastic bottle 24.7 3.6 3.1 28.7 16 23 30

Sting 330ml plastic bottle 17.0 3.3 2.2 20.7 22 27 33

Del Monte 240ml can 25.0 2.4 3.0 27.7 11 19 24

Zest-O 200ml pouch 5.6 2.0 0.8 7.8 40 36 20

Tropicana Twister 355ml plastic bottle 23.5 3.6 2.9 27.5 17 24 36

Sun Glo 200ml pouch 5.6 2.0 0.8 7.8 40 36 25

Big 250 250ml pouch 6.0 2.5 0.9 8.8 47 39 25

Plus! 250ml pouch 6.0 2.5 0.9 8.8 47 39 25

Minute Maid 250ml plastic bottle 12.1 2.5 1.6 14.9 23 27 19

Gina 250ml can 27.7 2.5 3.3 30.5 10 19 30

Sunkist 235ml pouch 16.1 2.4 2.0 18.7 16 23 19

PHP 10/liter




Proposal


per container

Old price

(in PHP)Excise VAT

New price

(in PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

(grams)

C2 355ml plastic bottle 15.8 3.6 2.1 19.7 25 29 46

Lipton 200ml plastic bottle 18.8 2.0 2.2 21.0 12 20 15

Real Leaf 250ml plastic bottle 19.0 2.5 2.3 21.8 15 22 26

ONE 355ml plastic bottle 18.5 3.6 2.4 22.5 21 27 27

PHP 10/liter




Proposal

Concentrates, per containerOld price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

(grams)

Magnolia Fruit Drink Lemonade 400gram big sachet 46.0 41.4 9.9 87.4 90 53 322

Swiss Miss 31gram sachet 14.0 1.8 1.7 14.5 4 14 16

Tang 25gram sachet 9.0 10.0 2.2 19.2 114 58 20

Eight O'Clock 25gram sachet 8.5 12.0 2.4 21.0 147 64 24

Nestea 25gram sachet 9.5 10.0 2.2 19.7 107 57 20

Sunquick 850ml bottle 243.0 82.8 36.0 309.7 27 30 644

SM Bonus - Dalandan 350ml bottle 86.0 28.8 12.7 109.0 27 30 240

SM Bonus Honey Calamansi 350ml bottle 80.0 28.8 12.0 103.7 30 31 228

Nesfruta 25gram sachet 9.3 10.0 2.2 19.5 110 58 21

Eight O'Clock Iced Tea 25gram sachet 9.5 10.0 2.2 19.7 107 57 20

Extra Joss 4.6gram sachet 4.9 3.0 0.9 7.7 58 44 0

Lipton Iced Tea 25gram sachet 9.0 10.0 2.2 19.2 114 58 20

Sun Glo Mixers 25gram sachet 9.0 12.0 2.4 21.5 139 63 19

Eight O'Clock Ponkana 25gram sachet 10.3 10.0 2.3 20.4 98 55 21

Nescafe Blend and Brew 20gram sachet 4.6 1.5 0.7 5.8 26 29 13

PHP 10/liter




Source:

DOF staff

estimates

Proposal


per container

Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

(grams)

Coca-Cola 330ml can 22.0 1.7 2.5 23.8 8 18 35

Pepsi 330ml can 21.5 1.8 2.5 23.5 9 18 41


Sprite 355ml can 22.2 1.8 2.6 24.1 9 18 38




7-Up 355ml can 22.2 1.8 2.6 24.1 9 18 37



Mirinda 330ml can 24.5 1.7 2.8 26.3 8 17 36








PHP 5/liter




Proposal


per container

Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

(grams)




Del Monte 240ml can 25.0 2.8 2.8 26.3 5 15 24

Zest-O 200ml pouch 5.6 0.7 0.7 6.7 20 26 20


Sun Glo 200ml pouch 5.6 0.7 0.7 6.7 20 26 25

Big 250 250ml pouch 6.0 0.8 0.8 7.4 24 28 25

Plus! 250ml pouch 6.0 0.8 0.8 7.4 23 28 25


Gina 250ml can 27.7 3.1 3.1 29.1 5 15 30

Sunkist 235ml pouch 16.1 1.9 1.9 17.4 8 17 19

PHP 5/liter




Proposal


per container

Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

(grams)





PHP 5/liter




Proposal

Concentrates, per containerOld price (in

PHP)Excise VAT

New price

(in PHP)

Percentage

increase in

price

Tax

burden (in

%)

Sugar

content

(grams)

Magnolia Fruit Drink Lemonade 400gram big sachet 46 20.7 7.4 69.18 20 26 322

Swiss Miss 31gram sachet 14 0.9 1.6 15.01 3 13 16

Tang 25gram sachet 9 5 1.6 14.60 25 29 20

Eight O'Clock 25gram sachet 8.5 6 1.6 15.22 32 32 24

Nestea 25gram sachet 9.5 5 1.6 15.10 24 28 20

Sunquick 850ml bottle 243 41.4 31.0 289.37 19 25 644

SM Bonus - Dalandan 350ml bottle 86 14.4 10.9 102.13 19 25 240

SM Bonus Honey Calamansi 350ml bottle 80 14.4 10.3 96.13 20 26 228

Nesfruta 25gram sachet 9.25 5 1.6 14.85 24 28 21

Eight O'Clock Iced Tea 25gram sachet 9.5 5 1.6 15.10 24 28 20


Lipton Iced Tea 25gram sachet 9 5 1.6 14.60 25 29 20

Sun Glo Mixers 25gram sachet 9 6 1.7 15.72 30 31 19

Eight O'Clock Ponkana 25gram sachet 10.3 5 1.7 15.90 22 27 21


PHP 5/liter


Price impact of PHP0.10/gram taxper container (1/4)


Proposal

Non-concentrates (RTD SSBs), per

container

Old price

(in PHP)

Excise

TaxVAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden (in

%)

Sugar

content

(grams)

Coca-Cola 330ml can 22.0 3.5 2.8 25.8 18 24 35

Pepsi 330ml can 21.5 4.1 2.8 26.1 21 26 41


Sprite 355ml can 22.2 3.8 2.8 26.4 19 25 38




7-Up 355ml can 22.2 3.7 2.8 26.3 19 25 37



Mirinda 330ml can 24.5 3.6 3.1 28.5 16 23 36








PHP 0.10/gram




Proposal


container

Old price

(in PHP)Excise tax VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden (in

%)

Sugar

content

(grams)




Del Monte 240ml can 25.0 2.4 3.0 27.7 11 19 24

Zest-O 200ml pouch 5.6 2 0.8 7.8 40 36 20


Sun Glo 200ml pouch 5.6 2.5 0.9 8.4 50 40 25

Big 250 250ml pouch 6.0 2.5 0.9 8.8 47 39 25

Plus! 250ml pouch 6.0 2.5 0.9 8.8 47 39 25


Gina 250ml can 27.7 3 3.3 31.1 12 20 30

Sunkist 235ml pouch 16.1 1.9 2.0 18.2 13 21 19

PHP 0.10/gram




Proposal


container

Old price

(in PHP)

Excise

TaxVAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden (in

%)

Sugar

content

(grams)





PHP 0.10/gram




Proposal


PHP)

Excise

taxVAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden (in

%)

Sugar

content

(grams)



Tang 25gram sachet 9.0 2.0 1.2 11.2 25 29 20













PHP 0.10/gram




Source:

DOF staff

estimates

Proposal


per container

Old price

(in PHP)

Excise

TaxVAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden (in

%)

Sugar

content

(grams)

Coca-Cola 330ml can 22.0 1.7 2.6 23.9 9 18 35

Pepsi 330ml can 21.5 2.1 2.5 23.8 11 19 41


Sprite 355ml can 22.2 1.9 2.6 24.3 10 19 38




7-Up 355ml can 22.2 1.9 2.6 24.2 9 18 37



Mirinda 330ml can 24.5 1.8 2.8 26.5 8 18 36








PHP 0.05/gram




Proposal


per container

Old price

(in PHP)Excise tax VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden (in

%)

Sugar

content

(grams)




Del Monte 240ml can 25.0 1.2 2.8 26.3 5 15 24

Zest-O 200ml pouch 5.6 1 0.7 6.7 20 26 20


Sun Glo 200ml pouch 5.6 1.25 0.8 7.0 25 29 25

Big 250 250ml pouch 6.0 1.25 0.8 7.4 24 28 25

Plus! 250ml pouch 6.0 1.25 0.8 7.4 23 28 25


Gina 250ml can 27.7 1.5 3.1 29.4 6 16 30

Sunkist 235ml pouch 16.1 0.95 1.8 17.2 7 16 19

PHP 0.05/gram




Proposal


per container

Old price

(in PHP)

Excise

TaxVAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden (in

%)

Sugar

content

(grams)





PHP 0.05/gram




Proposal


PHP)Excise tax VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

(grams)



Tang 25gram sachet 9.0 1.0 1.1 10.1 11 21 20













PHP 0.05/gram


Price impact of PHP10/liter taxper liter equivalent (1/4)


Source:

DOF staff

estimates

Proposal


per liter equivalent

Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

per liter

(grams)

Coca-Cola 330ml can 31.0 10.0 4.5 42.2 36 34 108

Pepsi 330ml can 31.0 10.0 4.5 42.2 36 34 115


Sprite 355ml can 32.3 10.0 4.7 43.5 35 34 107




7-Up 355ml can 31.0 10.0 4.5 42.2 36 34 104



Mirinda 330ml can 32.0 10.0 4.6 43.2 35 34 109





PHP 10/liter




Proposal



Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

per liter

(grams)




Del Monte 240ml can 70.5 10.0 8.8 81.7 16 23 100

Zest-O 200ml pouch 28.0 10.0 4.2 39.2 40 36 100


Sun Glo 200ml pouch 28.0 10.0 4.2 39.2 40 36 125

Big 250 250ml pouch 23.8 10.0 3.8 35.0 47 39 100

Plus! 250ml pouch 24.0 10.0 3.8 35.2 47 39 100


Gina 250ml can 110.8 10.0 13.1 122.0 10 19 120

Sunkist 235ml pouch 68.5 10.0 8.5 79.7 16 23 81

PHP 10/liter




Proposal



Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

per liter

(grams)





PHP 10/liter




Proposal

Concentrates (in liter equivalent)Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden (in

%)

Sugar content

per liter (in

grams)



Tang 25gram sachet 9.0 10.0 2.2 18.0 124 60 20













PHP 10/liter




Source:

DOF staff

estimates

Proposal



Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

per liter

(grams)

Coca-Cola 330ml can 31.0 5.0 3.9 36.6 18 24 108

Pepsi 330ml can 31.0 5.0 3.9 36.6 18 24 115


Sprite 355ml can 32.3 5.0 4.1 37.9 17 24 107




7-Up 355ml can 31.0 5.0 3.9 36.6 18 24 104



Mirinda 330ml can 32.0 5.0 4.0 37.6 18 24 109





PHP 5/liter




Proposal



Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

per liter

(grams)




Del Monte 240ml can 70.5 5.0 8.2 76.1 8 17 100

Zest-O 200ml pouch 28.0 5.0 3.6 33.6 20 26 100


Sun Glo 200ml pouch 28.0 5.0 3.6 33.6 20 26 125

Big 250 250ml pouch 23.8 5.0 3.2 29.4 24 28 100

Plus! 250ml pouch 24.0 5.0 3.2 29.6 23 28 100


Gina 250ml can 110.8 5.0 12.5 116.4 5 15 120

Sunkist 235ml pouch 68.5 5.0 7.9 74.1 8 17 81

PHP 5/liter




Proposal



Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

per liter

(grams)





PHP 5/liter




Proposal

Concentrates, per liter equivalentOld price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar content

per liter (in

grams)



Tang 25gram sachet 9.0 5.0 1.6 14.6 62 45 20













PHP 5/liter


Price impact of PHP0.10/gram taxper liter equivalent (1/4)


Proposal



Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

per liter

(grams)

Coca-Cola 330ml can 31.0 10.8 4.6 43.1 39 36 108

Pepsi 330ml can 31.0 11.5 4.7 43.9 42 37 115


Sprite 355ml can 32.3 10.7 4.7 44.3 37 35 107




7-Up 355ml can 31.0 10.4 4.6 42.7 38 35 104



Mirinda 330ml can 32.0 10.9 4.7 44.2 38 35 109





PHP 0.10/gram




Proposal



Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

per liter

(grams)




Del Monte 240ml can 70.5 10.0 8.8 81.7 16 23 100

Zest-O 200ml pouch 28.0 10.0 4.2 39.2 40 36 100


Sun Glo 200ml pouch 28.0 12.5 4.5 42.0 50 40 125

Big 250 250ml pouch 23.8 10.0 3.8 35.0 47 39 100

Plus! 250ml pouch 24.0 10.0 3.8 35.2 47 39 100


Gina 250ml can 110.8 12.0 13.3 124.2 12 20 120

Sunkist 235ml pouch 68.5 8.1 8.3 77.6 13 21 81

PHP 0.10/gram




Proposal



Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

per liter

(grams)





PHP 0.10/gram




Proposal

Concentrates (in liter equivalent)Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden (in

%)

Sugar content

per liter (in

grams)



Tang 25gram sachet 9.0 7.1 1.8 11.2 25 29 20













PHP 0.10/gram




Source:

DOF staff

estimates

Proposal


liter equivalent

Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

per liter

(grams)

Coca-Cola 330ml can 31.0 5.4 4.0 37.0 20 25 108

Pepsi 330ml can 31.0 5.8 4.0 37.5 21 26 115


Sprite 355ml can 32.3 5.4 4.1 38.3 19 25 107




7-Up 355ml can 31.0 5.2 3.9 36.8 19 25 104



Mirinda 330ml can 32.0 5.5 4.1 38.1 19 25 109





PHP 0.05/gram




Proposal


liter equivalent

Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

per liter

(grams)




Del Monte 240ml can 70.5 5.0 8.2 76.1 8 17 100

Zest-O 200ml pouch 28.0 5.0 3.6 33.6 20 26 100


Sun Glo 200ml pouch 28.0 6.3 3.8 35.0 25 29 125

Big 250 250ml pouch 23.8 5.0 3.2 29.4 24 28 100

Plus! 250ml pouch 24.0 5.0 3.2 29.6 23 28 100


Gina 250ml can 110.8 6.0 12.6 117.5 6 16 120

Sunkist 235ml pouch 68.5 4.0 7.8 73.0 7 16 81

PHP 0.05/gram




Proposal


liter equivalent

Old price

(in PHP)Excise VAT

New

price (in

PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar

content

per liter

(grams)





PHP 0.05/gram




Proposal

Concentrates, per liter equivalentOld price (in

PHP)Excise VAT

New price

(in PHP)

Percentage

increase in

price

Tax

burden

(in %)

Sugar content

per liter (in

grams)



Tang 25gram sachet 9.0 1.0 1.1 10.1 12 21 20













PHP 0.05/gram


8/30/2017 195

Summary of calories and sugar content

Product Calories (kcal) Sugar content (g)

Candy (1 pc) 10 2

Bubble gum (1 pc) 20 5.3

Cookie (1 pc) 48.8 6.9

Corn (1 cub) 96 3.6

Banana (1 pc) 105 14

Ice cream (1 scoop) 137 14

Cake (1 slice) 200 18.9

Rice (1 cup) 206 0.1

Fruit shake (12 oz) 210 32

Chocolate (1 bar) 235 22.7

Starbucks frappe (tall) 290 42


Non-tax measures



DOH initiatives on non-tax measures to complement the SSB excise tax.

• Complementary non-tax measures are being organized around the Health in All Policies Approach. This strategy is being envisioned to include:

1) Regulatory measures on marketing, mandatory labeling, and sales of unhealthy food and beverage products;

2) Direct provision and incentive-based measures to create enabling environments for the people to sustain a healthy lifestyle, and to provide them options and incentives to downshift towards healthier options.; and

3) Information and advocacy measures for health promotion and behavioral change communication, among other strategies.


Source: DOH position paper on SSB


Other non-tax measures that can complement the SSB taxation

• Make available healthier, cheaper alternatives such as plain water and milk.

• Regulate the “self-regulation” or voluntary labeling practices of beverage and allied industries.

• Improve nutrition literacy among Filipinos.

• Work with other government agencies to create healthy living and working environments that are non-obesogenic.


sugar sweetened beverage tax 10 leading causes of mortality: philippines, 2014 source: department of...

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