Proposed Sin Tax policy to include all sweetened and sugary soft drinks

Proposed Sin Tax policy to include all sweetened and sugary soft drinks

By Gemma Rains

The Potential Expansion of The Philippines Sin Taxes

More than two years ago the Philippine Congress passed new laws (colloquially known as the ‘sin taxes’) that increase the amount of tax that the government receives from the sales of both tobacco and alcohol in the country. The purpose of these taxes were two fold; firstly, they were aimed to act as a deterrent to prevent citizens from becoming addicted to tobacco or drinking to excess. They were also intended to increase the governments coffers in order to expand the health care coverage in the country. Since passing the Sin Tax Law in 2012, the Philippines have seen the amount of revenue they earn from sin taxes increase dramatically every year; in fact, the amount they were forecast to receive in 2014 was a 40% increase on the 2013 figure. The financial implication of the sin tax is incredible: Based on a recent report from the Department of Finance the figures from the collection of excise tax on cigarettes and alcohol reached P91.64 billion from January to September 2014.

The Expansion of the Sin Tax?

No doubt emboldened by the incredible amount of revenue they have earnt from the current sin taxes are in place, it has been proposed that the Sin Tax policy be expanded to include all sweetened and sugary soft drinks, such as Coca cola and Lemonade. The dangers of excessive alcohol consumption are well documented, as are the very real dangers of smoking tobacco. Both of these vices can lead to serious health issues including, but not limited to, a higher risk of developing cancer, heart disease, obesity and diabetes. According to the World Health Organisation, heart disease, stroke, and lung disease are the three biggest causes of death in the world, and these are all conditions that can be exacerbated by both drinking alcohol and smoking tobacco.

Soda is now being regarded as the latest battleground in the government’s war on poor health and focus on raising the health standards of its citizens. Whilst most people are aware of the health ramifications of drinking alcohol or smoking tobacco, very few are aware of the health dangers that sodas and sugary drinks pose. Plenty of research has been undertaken, and the direct link between tobacco and alcohol and all of these conditions has been firmly established. By contrast, there has been a less cohesive media campaign linking excessive sugar consumption with life threatening illnesses such as diabetes and obesity. However it is clear that there are obvious health evils associated with the overconsumption of sugar. The proposal laid out suggests that the government impose a 10 percent ad valorem tax on all sugary soft drinks and carbonated beverages that are sold in bottles or other tight containers. The proceeds that the government would make from this new sin tax would be impressive, and it has been proposed that they should go to a rehabilitation fund separated apart for the construction of housing, roads, and any other infrastructure problems created or affected by natural calamities in the country.

A Huge Political Issue

Whilst the world’s tobacco and alcohol lobbies are huge and are considered a force to be reckoned with, the pro-sugar lobbies and industry is much larger. The International Monetary Fund has already moved to disassociate itself from this latest proposal, as it does not want to isolate itself from the potential financial gains that can be made from close ties to the world’s sugar industries. This new bill, then, has a long way to go before it will be passed, but it seems to only be an additional positive step in the right direction for the health and wellbeing of the nation’s citizens.

Obesity across the world has more than doubled since 1980, and particularly worrying is the fact that obesity levels in children under the age of five has increased so that 42 million children worldwide are now affected. The medical expenses and implications associated with this are only due to grow unless this obesity crisis is tackled, and a financial tax on choosing to ingest sugary drinks seems to be both a manageable and cost effective way to do so. Only time will tell if the government choices to take this brave step in the right direction.