The Department of Finance (DOF) and the Department of Health (DOH) are jointly proposing a junk food and sweetened beverage tax for health reasons and to increase the country\u2019s tax revenue collection. DOF Secretary Ben Diokno bared the proposal which looks to impose a P10\/100 grams or P10\/10ml tax on foods considered as junk. Such foods include confectioneries, snacks, desserts and frozen confectioneries.<\/p>\n\n\n\n
Likewise, a uniform tax of P12\/liter, regardless of sweetener used, will be proposed for sugar-sweetened beverages (SSB). This tax rate on SSB will increase by 4% annually to make the measure effective and reduce the consumption of such unhealthy beverages.<\/p>\n\n\n\n
Our View: Good intentions at the wrong time. A healthy population and workforce will lead to higher productivity and higher profits down the line. However, this tax proposal will unnecessarily burden Filipino families with a much higher food expenditure at a time when the cost of basic goods and services have risen as well. Such tax will force households to make healthier choices, but we don\u2019t think the low-income households have much of a choice.<\/p>\n\n\n\n
SSB tax in 2018<\/strong><\/p>\n\n\n\n It was January 2018 when the first excise tax of P6\/liter and P12\/liter were imposed and URC saw a 10% drop in volumes sold of C2. URC was able to fully pass-on the excise tax as they increased prices by around 17%. This time, with a broader tax measure and lower spending power, we wonder if URC will be able to quickly pass-on this additional cost to the consumers. <\/p>\n\n\n\n The market started to discount narrower margins and lower profits for URC and MONDE with both stocks declining by 5.12% and 7.38% respectively. MONDE renews its downtrend, as it closed at a new all-time low of P7.40 while URC closed at its lowest for 2023 at P129.80.<\/p>\n\n\n\n