The proposal to raise the taxes slapped on sweetened beverages stoked concerns that the use of artificial sweeteners will accelerate to the detriment of the domestic sugarcane industry, according to the Sugar Regulatory Administration (SRA).
SRA Administrator Pablo Luis Azcona said hiking the current two-tiered tax bracket for sugar-sweetened beverage (SSB) while retaining cane sugar in the same category as artificial sweeteners could spur the importation of the sugar substitutes.
At present, SSB containing cane sugar and artificial sweeteners (sucralose, aspartame, saccharin, and acesulfame potassium) are taxed P6 per liter while the levy for those with high-fructose corn syrup (HFCS) is P12 per liter.
The Department of Finance (DOF) wants to raise the lower tax bracket to P20 per liter and the higher tax bracket to P40 per liter while keeping the sweeteners in their respective categories.
‘The SRA fears that if the SSB tax on sugar is raised, (there would be a repeat of the 2018 situation),’ Azcona told reporters.
When the tax for HFCS was increased to P12 per liter in 2018, he said manufacturers shifted to artificial sweeteners which was also placed in lower tax bracket together with cane sugar.
‘So, over the years, as the sugar price was increasing, their use of artificial (sweeteners) was also increasing.’
SRA issued Sugar Order (SO) 5, which imposes a clearance fee on the importation of artificial sweeteners under Harmonized System (HS) codes 2106 and chapter 29, which are used in the manufacture of food and beverages.
This includes, but is not limited to, any form or concentration of sucralose, aspartame, saccharin, acesulfame potassium, and processed stevia.
The agency decided to issue the order following consultative meetings in which stakeholders raised their ‘grave concern’ on the effects of ‘the long-practiced unregulated importation into the country of artificial sweeteners’ on the local sugar sector.
Stakeholders comprising farmers, millers, and refiner groups recently issued a joint statement seeking to retain the P6 per liter tax imposed on beverage manufactured with local cane sugar.
Drinks using any sweetener other than pure cane sugar as well as imported sweetened beverages should be taxed P40 per liter, they added.
The groups pointed out that from the absence of recorded artificial sweetener imports prior to the TRAIN Law enacted in 2018, its shipments jumped and cornered 18.4 percent of the market or 503,117 metric tons (MT) in sugar equivalent for crop years 2023-2024 and 2024-2025.
HFCS, which previously accounted for 11 percent, plunged to 15,901 MT, they added.
‘But cane (sugar) did not win that ground back; artificial sweeteners took it,’ the groups said.
‘This is happening to an industry that receives very little subsidy, supports more than five million Filipinos, and already contends with climate change, El Niño, flooding, and the red-striped soft scale insect (RSSI) infestation.’
The groups then called on the SRA to stand with their proposal and convey its findings under SO 5 that artificial sweeteners ‘compete head-on’ with domestic cane sugar.
‘This industry has weathered droughts, floods, pests, and price swings by standing together. We stand together again now, ready to help the (SRA) in any way it needs.’