Beverage industry urges DoF to review tax hike on sugary drinks

By Beatriz Marie D. Cruz, Senior Reporter

A BEVERAGE INDUSTRY group urged the Philippine government to review its proposed taxes on sugary drinks, warning that new levies could raise prices of everyday goods and offset the benefits of planned income tax relief.

“We support the intent of the ProGRESS (Promoting Growth, Revenue, and Equity towards Socio-economic Sustainability) package to ease the tax burden on workers and small businesses and to achieve better health outcomes,” Beverage Industry Association of the Philippines President Juan Lorenzo Tañada said in an e-mail to BusinessWorld.

“But what government gives with one hand through income tax relief, it may very well take back with the other through higher prices on everyday products,” he said.

The Department of Finance (DoF) recently unveiled its proposed ProGRESS bill, which seeks to raise the annual personal income tax-exempt threshold to P350,000 and remove the minimum corporate income tax for micro and small enterprises.

To offset the revenue losses from the tax relief, the DoF is seeking to generate revenues from a proposed tax hike on sweetened beverages and impose new taxes on edible ices such as ice cream, sorbets, ice lollies, and frozen yogurt.

Under the proposed measure, the excise tax on beverages using caloric or noncaloric sweeteners will be raised to P20 per liter from the current P6, while the tax on beverages using high-fructose corn syrup will be hiked to P40 per liter from P12. The proposed sweetened beverage tax rates would be indexed by 5% annually.

Mr. Tañada noted that raising taxes on sugary beverages is “untimely” as consumers grapple with high inflation.

“Consumer spending, which is a key pillar of GDP (gross domestic product) is already under strain. When consumers cut back, VAT (value-added tax) collections shrink along with them, risking the very tax base government depends on,” he said.

Since the Middle East war erupted, headline inflation remained above the central bank’s 3% target for five consecutive months, bringing the average to 5% as of July.

Philippine economic growth slowed to a post-pandemic low of 2.3% in the second quarter, as oil shock stoked inflation and dampened household consumption.

Household consumption, which makes up around 70% of the Philppines’ gross domestic product, grew by 2.8% in the second quarter, the weakest pace since the 4.8% decline in the first quarter of 2021.

Nestlé Philippines Head of Corporate Affairs Jose Uy III said there is a need to ensure that the DoF’s proposed taxes are evidence-based.

“We are not against a policy that helps encourage Filipino healthy living. That is part of us and our purpose,” he said at a briefing on Thursday.  “However, I personally believe that any major policy that is being created by the legislators or the government has to undergo scientific or evidence-based [review,]” Mr. Uy said.

Mr. Tañada also noted the tax hike on sugary drinks is not based on evidence, adding that it “carries unintended consequences particularly when other measures remain available, including tightening of existing tax collection.”

“We urge policymakers to listen to the affected sectors: manufacturers, sari-sari store owners, farmers, sugar millers, and all other stakeholders across the value chain. As important, the low- and middle-class consumers who will ultimately bear the cost of tax increases. Government must build reforms grounded in evidence, fairness, and genuine dialogue,”  Mr. Tañada said.

Ivy Sicat, Nestlé Philippines’ nutrition advocacy lead, noted that the high prevalence of diabetes among Filipinos stem from a lack of protein and fiber in their diets rather than excessive sugar intake.

“We have to look into the diet of Filipinos. Do these particular food categories really significantly contribute to the sugar intake of Filipinos?” she told the same briefing.

Mr. Tañada also noted Filipinos have already been drinking less sugary drinks and paying more since the tax took effect in 2018.

“By the government’s records, beverage consumption dropped 9% in 2025 alone, and its own projections show a further decline of at least one-third the current sales volume of beverages if the proposed increase pushes through. But what has not gone down are obesity and overweight rates at 43.1% also in 2025… If taxing beverages was supposed to make Filipinos healthier, the numbers say otherwise,” he said.