and Inclusion Package 1 Sugar sweetened beverage tax As of August - - PowerPoint PPT Presentation

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Tax Reform for Acceleration and Inclusion

Package 1 – Sugar sweetened beverage tax

As of August 30, 2017 4:54 PM

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Table of contents

1. 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

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Key messages and highlights

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Key messages

1. 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.

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Key messages

3. Why an SSB excise tax?

• Discourage consumption.
• Encourage consumption of healthier products.
• Raise public awareness of harms.
• Incentive for industry to develop healthier products.
• Raise revenues for health and education.
• Note that the regressivity argument is not valid for a non-

essential or non-good. 4. Why tax SSB and not sugar broadly?

• 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.

• Affordable: especially to the poor and youth, and sometimes

cheaper than water

• Accessible: available in almost every corner, often not aware of

the consequences. This is why SSB tax is a public policy.

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Obesity

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

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There is growing trend in overweight and obese adult Filipinos.

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11.8 14 16.9 19.7 21.4 1.7 2.6 3.2 4.3 5.2 5 10 15 20 25 Percent

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

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

• besity is positively related to wealth.

Wealth and residence breakdown of adult obesity and chronic energy deficiency incidence

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Source: 8th NNS

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There is an increasing trend in prevalence of

• verweight/obese Filipinos through the years.

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5.8 6.8 6.6 7.4 9.1 8.6 4.9 6.1 6.2 6.7 8.3 9.2 24 26.6 28.4 31.1 31.1 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) percent

Prevalence of overweight/obese* Filipinos

School-age children Adolescents Adults

Source: National Nutrition Survey conducted by FNRI

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Prevalence of overweight/obesity is higher in richer quintiles.

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16.6 23.5 29.8 37 43.7 5 10 15 20 25 30 35 40 45 50 Poorest Poor Middle Rich Richest percent Wealth quintile

Prevalence of overweight/obese among adults, 2015

Source: FNRI, 2015

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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

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

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Classification BMI (in imperial) Weight (lbs) Underweight < 3.79 < 107.8 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 Obese class II 7.17 to 8.18 203.67 to 232.67 Obese class III > 8.18 > 232.67 Source: FNRI

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The ideal weight of an average Filipina with height 5’0”, range from 95lbs to 128 lbs.

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Classification BMI (in imperial) Weight (lbs) Underweight < 3.79 < 94.75 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 Obese class II 7.17 to 8.18 179.1 to 204.5 Obese class III > 8.18 > 204.5 Source: FNRI

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Diabetes

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In 2015, there were around 3.6 million cases of diabetes in the Philippines*

Source: International Diabetes Foundation

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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.

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

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10 15 25 25 32 44 55 56 70 126 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

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

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1.8 2.7 4.4 4.4 5.6 7.7 9.7 9.9 12.3 22.2 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

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

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)

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Diabetes is more common among the richer wealth quintiles, but there is faster increase in diabetes prevalence in the poorer quintiles.

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1.8 3 3.5 6.4 8.1 3.5 4.3 4.6 6.4 8.1 1 2 3 4 5 6 7 8 9 Poorest Poor Middle Rich Richest prevalence Wealth quintile

Prevalence of diabetes among adults

2008 2013

Sources: NSO, 2008 and FNRI 2013

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Increasing prevalence of clinically diagnosed diabetes

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Source: National Nutrition Survey conducted by FNRI

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Increasing prevalence of clinically diagnosed diabetes

IN THOUSANDS

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Prevalence of diabetes, by income class

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3.4 4 4.4 6 7.7 1 2 3 4 5 6 7 8 9

Percent Household income class

Prevalence of diabetes, 2013

Source: FNRI

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Prevalence of diabetes, by location

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4.3 6 1 2 3 4 5 6 7

Percent Location

Prevalence of diabetes, 2013

Source: FNRI

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Prevalence of diabetes, by income class, urban

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5.7 3.4 4.9 6.1 7.8 1 2 3 4 5 6 7 8 9

Percent Household income class

Prevalence of diabetes (urban), 2013

Source: FNRI

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Prevalence of diabetes, by income class, rural

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2.6 4.4 3.8 5.9 7.4 1 2 3 4 5 6 7 8

Percent Household income class

Prevalence of diabetes (rural), 2013

Source: FNRI

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Sugar consumption

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866 grams

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855 grams

Source: FNRI

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Products in “miscellaneous" food group include beverages, condiments and others.

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Source: FNRI, Philippine figures: Facts and Nutrition

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Sugar consumption

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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.

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SSB consumption

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What are sugar sweetened beverages (SSBs)?

• SSBs are pre-packed drinks with free/added

sugar.

• 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.

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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 .

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

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Income quintile 2003 2003 2006 2006 2009 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 estimates

Numbers are in grams per person per year calculated based on the PSA Family Income and Expenditure Surveys.

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

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

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

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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)

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

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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

Sources: PSA and DOF staff estimates

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

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Detailed consumption of SSB, total unadjusted

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Income decile Softdrinks Fruit juice and concentrates Coffee and cocoa, instant Energy drinks Condensed, evaporated, and

• ther

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

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Detailed consumption of SSB, total adjusted

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Income decile Softdrinks Fruit juice and concentrates Coffee and cocoa, instant Energy drinks Condensed, evaporated, and

• ther

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 Sources: PSA, DOF staff estimates Average annual detailed SSB consumption, total adjusted, PHP

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Detailed consumption of SSB, per capita unadjusted

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Income decile Softdrinks Fruit juice and concentrates Coffee and cocoa, instant Energy drinks Condensed, evaporated, and

• ther

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 Sources: PSA, DOF staff estimates Average annual detailed SSB consumption, per capita unadjusted, PHP

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Detailed consumption of SSB, per capita adjusted

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Income decile Softdrinks Fruit juice and concentrates Coffee and cocoa, instant Energy drinks Condensed, evaporated, and

• ther

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 Sources: PSA, DOF staff estimates Average annual detailed SSB consumption, per capita adjusted, PHP

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

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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 Count, in thousand persons

Consumption of SSBs by population groups

Pre-school School-age Adolescents

Source: National Nutrition Survey, 2008

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

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Source: National Nutrition Survey conducted by FNRI

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Students who usually drink carbonated soft drinks

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77 62 57 54 52 50 46 45 44 42 38 34 34 33 31 29 26 22 19

10 20 30 40 50 60 70 80 90

Percent

Students (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

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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

• f beverages by sex, NNS, Philippines: 2008

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

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SSB tax and better health

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Source: Institute for Health Metrics and Evaluation (2015)

5 1 97 31 6 87 20 40 60 80 100 120 Overweight/ Obesity Diabetes Dental caries in percent

National prevalence: Obesity, diabetes and dental caries (2015)

Children Adults

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

• f disability in

the Philippines.

4th

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Why impose excise tax on SSBs?

• SSBs contribute to obesity, diabetes, and dental

caries.

• Soft drink consumption is significantly linked to overweight,
• besity, and diabetes worldwide, including in low- and middle-

income countries.

• 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.

• 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

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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).

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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 and dementia (Pase, et. al., 2017).

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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).

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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
• f medicine, European food safety agency, World

cancer research fund, and American heart association.

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The SSB tax

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CTRP-Package-ONE_SSB-HB292 - Copy.png

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

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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

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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.

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Proposed earmarking provisions for SSB excise tax in HB 5636

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

• Provision of sports facilities for public schools and access to potable drinking

water supply in all public places.

• Develop and sustain school-based feeding programs.
• Prevention and awareness programs against obesity, overweight and dental

caries.

• Funding FDA to fulfill its mandate of ensuring safety and quality of health

products.

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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 2015

• To help farmers increase productivity.
• To provide livelihood opportunities, develop

alternative farming systems and ultimately enhance farmers’ income.

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Arguments to tax certain products; Tax options

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Implementing a volume-based SSB tax

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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

• bjectives

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Implementing a sugar-based SSB tax

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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.

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DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Why sodas should be taxed

• A 375 ml (12 fluid oz) Coke product has approximately 40g
• f 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).

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DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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.

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DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

• n raw sugar)

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DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Serving size Volume (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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Economic cost

8/30/2017 DEPARTMENT OF FINANCE 76

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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.

8/30/2017 DEPARTMENT OF FINANCE 77

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 payments

January – June 2017, in pesos

Source: PhilHealth

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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.

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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
• verweight and obese respectively.

8/30/2017 DEPARTMENT OF FINANCE 81

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

• ur young labor force. Instead of being

productive, they are sick and waste potential life.

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DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Industry sales will still be strong

• However, industry sales will still be strong due

to

• Higher disposable income due to lower PIT
• Rising middle class
• Fast growing economy (6.5%)
• Fast growing population (1.8%)
• Moderate inflation (3%)
• Falling poverty and unemployment
• Substitute products
• Even sari-sari stores will grow due to the above

reasons.

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DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Breakdown of sari-sari store sales

8/30/2017 DEPARTMENT OF FINANCE 84

43 31 10 6 20 40 60 80 100 Percent

Share of sari-sari store sales (percent)

Cigarettes Soft drinks Food Laundry Hygiene Powdered milk Others

Source: AC Nielsen

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Breakdown of sari-sari store sales

8/30/2017 DEPARTMENT OF FINANCE 85

91 9 80 100 Percent

Retail mix (percent)

Sari-sari stores Other retail stores

Source: AC Nielsen

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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.

• 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)

• 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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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).

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DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

• wners by the year 2020 by giving them skills

training in managing their business and since 2016, has already helped around 83,000

• wners of sari-sari stores.
• Began in 2014 during then TESDA Director

General Joel Villanueva

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Financial position

• f top SSB firms

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DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

8/30/2017 DEPARTMENT OF FINANCE 90

121.6 76.8 55.3 19.0 9.1 9.1 8.2 6.1 5.0 25 50 75 100 125 150

PHP billions

Gross revenues of top beverage companies, 2015

Source: SEC

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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15.6 7.5 0.8 6.2 0.4 0.4 0.9 1.0 0.1 4 8 12 16 20

PHP billion

Net profit of top beverage companies, 2015

Source:SEC

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Overall impact

• n the people

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DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Decile/ percentile Description (assumes a family of 5 members) 2018 projected monthly household total income* Personal income tax Value- added tax Petrol and transportation Automobile** 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*

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DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Targeted transfers will be crucial in protecting the poor from shocks and can help improve the progressivity of the tax reform.

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

8/30/2017 DEPARTMENT OF FINANCE 94

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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.

2.6 1.2 0.9 0.9 1.2 0.1 1.1 2.0 2.5 2.4 0.0

• 0.2
• 5.0
• 5.8
• 10
• 8
• 6
• 4
• 2

2 4

Percent Average household

Percent increase in household income

Sources: PSA and DOF staff estimates

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Cross-country experience

8/30/2017 DEPARTMENT OF FINANCE 95

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

8/30/2017 96

Cross-country summary of specific and ad valorem SSB taxes

Source: Grattan Institute and World Health Organization

Country Base Type Rate Peso 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 drinks 3% Soft drinks 5% Natural and carbonated mineral waters 10% Dominica All SSB Ad valorem 10% PHP 7.05/L Philippines Specific Congo Ad valorem

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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Cross-country summary of specific and ad valorem SSB taxes

Source: Grattan Institute and World Health Organization

Country Base Type Rate Peso equivalent Egypt Carbonated soft drinks Ad valorem 25% PHP 4.46/L Soft drinks, soda, mineral water, fruit juices, and other similar drinks 5% PHP 4.22/L Energy drinks 10% PHP 8.44/L Malaysia Non-alcoholic drinks Ad valorem 10% PHP 2.74/L Soda 25% + 0.77 baht/440 cc PHP12.00+ PHP2.64/L Juices 20% + 0.37 baht/440 cc PHP19.47 + PHP1.27/L Other drinks 20% + 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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

8/30/2017 98

Cross-country summary of specific and ad valorem SSB taxes

Source: Grattan Institute and World Health Organization

Country Base Type Rate Peso 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 drinks 1.00 euros/ hectoliter PHP0.59/ L Sweetened drinks HUF 7.00/L PHP 1.34/L Energy drinks HUF 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 Specific Hungary France Specific

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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.”

8/30/2017 DEPARTMENT OF FINANCE 99

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Practices in other countries

• 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

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DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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.

8/30/2017 DEPARTMENT OF FINANCE 101

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Practices in other countries

• 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.

8/30/2017 DEPARTMENT OF FINANCE 102

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Practices in other countries

8/30/2017 DEPARTMENT OF FINANCE 103

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Sugar and HFCS

8/30/2017 DEPARTMENT OF FINANCE 104

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE. Source: Sugar Regulatory Administration

Value chain of Philippine sugar industry

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Bulk of local sugar consumption come from industries.

8/30/2017 DEPARTMENT OF FINANCE 106

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

Source: Sugar Regulatory Administration

Bulk of local sugar consumption come from industries.

8/30/2017 DEPARTMENT OF FINANCE 107

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Demand for sugar substitutes is high among households.

8/30/2017 DEPARTMENT OF FINANCE 108

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

Source: Sugar Regulatory Administration

Lower estimates Higher estimate Consumer type Aggregate demand for sugar substitutes by type of consumer (2014)

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Domestic sugar production

8/30/2017 DEPARTMENT OF FINANCE 109

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%

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

There is an increasing trend in HFCS importation.

8/30/2017 DEPARTMENT OF FINANCE 110

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

In 2016, 1.3 billion kg of sugar and confectionaries was imported valued at 24.3 billion pesos.

8/30/2017 DEPARTMENT OF FINANCE 111

HS4 Net 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 3.1 sugar confectionery (including white chocolate), not containing cocoa Total 1.36 24.4 Source: Bureau of Customs

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Revenue estimates and methodology

8/30/2017 DEPARTMENT OF FINANCE 112

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Comparison of estimated revenue collection

8/30/2017 DEPARTMENT OF FINANCE 113

Comparison of 2018 revenue from SSB excise tax in billion PHP HB 292 PHP10/liter Lower rate PHP5/liter Sugar content PHP0.05/gram

• f sugar

Sugar content PHP0.10/gram

• f 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.

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

8/30/2017 114

Estimated revenue impact

based 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 type Estimated incremental revenues (in billion PHP) Softdrinks Energy drinks Sweetened tea Fruit drinks Grand total

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Estimated revenue impact

based on PHP5/liter

8/30/2017 DEPARTMENT OF FINANCE 115

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 SSB type Estimated incremental revenues (in billion PHP) Softdrinks

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Estimated revenue impact

based on sugar content: PHP 0.10/gram

8/30/2017 DEPARTMENT OF FINANCE 116

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

Source: DOF staff estimates (as of May 5, 2017) Note: Computations does not include artificially sweetened SSBs.

Summary by SSB type - PHP 0.10 per gram of sugar SSB type Estimated incremental revenues (in billion PHP) Softdrinks Energy Drinks Sweetened Tea Fruit Drinks Grand Total

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Estimated revenue impact

based 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

Source: DOF staff estimates (as of May 5, 2017) Note: Computations does not include artificially sweetened SSBs.

Sweetened Tea Fruit Drinks Grand Total Summary by SSB type - PHP 0.05 per gram of sugar SSB type Estimated incremental revenues (in billion PHP) Softdrinks Energy Drinks

8/30/2017 DEPARTMENT OF FINANCE 117

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Estimated revenue impact

PHP5/liter (2018, 2019); PHP 0.05/g of sugar (2020 onwards) PHP2.5/liter for artificially sweetened SSBs

8/30/2017 DEPARTMENT OF FINANCE 118

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 SSB Estimated 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.

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Estimated incremental revenues, by company

PHP 10/liter

8/30/2017 DEPARTMENT OF FINANCE 119

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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 Source: DOF staff estimates (as of May 5, 2017) Company name Estimated incremental revenues (PHP)

8/30/2017 DEPARTMENT OF FINANCE 120

Note: Based on PHP10/liter tax

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Estimated revenue impact

PHP 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

Source: DOF staff estimates (as of August 11, 2017) Note: Estimates also exclude artificial sweetened SSBs. *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.

8/30/2017 DEPARTMENT OF FINANCE 121

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

8/30/2017 122

Estimated revenue impact

PHP 0.10/gram and PHP 0.05/gram

Proposal: Based on sugar content Tax rate: Php 0.05 per gram of sugar 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

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

Proposal: Based on sugar content Tax rate: Php 0.10 per gram of sugar 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

Source: DOF staff estimates (as of August 11, 2017) Note: Estimates also exclude artificial sweetened SSBs.

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Estimated revenue impact

PHP5/liter (2018, 2019); PHP 0.05/g of sugar (2020 onwards) PHP2.5/liter for artificially sweetened SSBs

8/30/2017 DEPARTMENT OF FINANCE 123

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

8/30/2017 125

Assumptions used in estimating the revenue impact

• Data
• 2015 Euromonitor data on the volume of sales in liters of SSBs
• Suggested retail price of SSBs based on supermarket survey

conducted by DOF staff

• Assumptions
• Elasticities
• Income elasticity: 1.58 (across the board) based from DOF

computation

• 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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Related literature on SSB elasticity estimates

8/30/2017 DEPARTMENT OF FINANCE 126

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.

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Responding to critiques

8/30/2017 DEPARTMENT OF FINANCE 127

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

8/30/2017 DEPARTMENT OF FINANCE 128

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

DOF response to BIAP position

BIAP 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

• r 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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

DOF response to BIAP position

BIAP position DOF response 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.

9/27/2016 DEPARTMENT OF FINANCE 130

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

DOF response to BIAP position

BIAP position DOF response 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

• f 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

• n sugar. Please look at the rationale

for each type of tax.

9/27/2016 DEPARTMENT OF FINANCE 131

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

DOF response to BIAP position

BIAP position DOF response 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

• ther 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.

9/27/2016 DEPARTMENT OF FINANCE 132

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

DOF response to BIAP position

BIAP position DOF response 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.

9/27/2016 DEPARTMENT OF FINANCE 133

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

DOF response to BIAP position

BIAP position DOF response 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).

9/27/2016 DEPARTMENT OF FINANCE 134

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

DOF response to BIAP position

BIAP position DOF response 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

9/27/2016 DEPARTMENT OF FINANCE 135

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

DOF response to BIAP position

BIAP position DOF response The resulting drop in business volume and job losses will lead to the reduction

• f 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.

9/27/2016 DEPARTMENT OF FINANCE 136

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

DOF response to BIAP position

BIAP position DOF response 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
• ne.

In fact, 28 million Filipinos are under- nourished, and this public health problem has negative implications to health like insulin resistance, dyslipidemia and

• thers.

On the other side, there are 31 million

• ver-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.

9/27/2016 DEPARTMENT OF FINANCE 137

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

DOF response to BIAP position

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

• besity and diabetes.

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).

9/27/2016 DEPARTMENT OF FINANCE 138

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

• besity 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.

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

DOF response to BIAP position

BIAP position DOF response 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).

9/27/2016 DEPARTMENT OF FINANCE 139

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.

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

• n 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.

8/30/2017 DEPARTMENT OF FINANCE 140

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

• Sugary beverages are a major contributor to
• besity 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.)

8/30/2017 DEPARTMENT OF FINANCE 141

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

• rder to be healthy and productive adults (DOH

position paper on SSB).

8/30/2017 DEPARTMENT OF FINANCE 142

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

• ptions.
• Steps are being initiated to develop

complementary non-tax measures to protect the health gains of SSB tax.

8/30/2017 DEPARTMENT OF FINANCE 143

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Sugar content and potential price changes

• f common SSBs

8/30/2017 DEPARTMENT OF FINANCE 144

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Manufacturer: The Coca-Cola Company Product: Coke regular (330mL)

8/30/2017 DEPARTMENT OF FINANCE 146

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

8/30/2017 DEPARTMENT OF FINANCE 147

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 Sugar content per ml volume: 6.3 percent

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

What will happen if you boil soft drinks?

8/30/2017 DEPARTMENT OF FINANCE 148

Source: Youtube

Manufacturer: Interbev Philippines Inc. Product: Cobra Energy Drink (350mL)

8/30/2017 DEPARTMENT OF FINANCE 149

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

Sugar content: 69g or 44ml Sugar content per ml volume: 12.4 percent

Manufacturer: Pepsi-Cola Products Philippines Product: Sting – Strawberry Flavor (330mL)

8/30/2017 DEPARTMENT OF FINANCE 150

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

Sugar content: 33g or 21ml Sugar content per ml volume: 6.3 percent

Manufacturer: Zesto Corporation Product: BIG 250 Orange Juice (250mL)

8/30/2017 DEPARTMENT OF FINANCE 151

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 Total carbohydrates 25g Sugar 25g Sodium 25mg

Sugar content: 25g or 16ml Sugar content per ml volume: 6.3 percent

Manufacturer: Universal Robina Corp. Product: C2 – Green Tea Apple Flavor (355mL)

8/30/2017 DEPARTMENT OF FINANCE 152

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 Total carbohydrates 25g Sugar 25g Sodium 35mg

Sugar content: 46g or 29ml Sugar content per ml volume: 8.2 percent

Manufacturer: Coca-Cola FEMSA, Philippines, Inc. Product: Minute Maid Fresh Orange Juice Drink (250mL)

8/30/2017 DEPARTMENT OF FINANCE 153

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 Total carbohydrates 19g Sugar 19g Sodium 77mg

Sugar content: 19g or 12ml Sugar content per ml volume: 4.8 percent

Manufacturer: Pepsi-Cola Products Philippines Product: Gatorade Sports Drink Blue Bolt (500mL)

8/30/2017 DEPARTMENT OF FINANCE 154

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 Total carbohydrates 12g Sugar 12g Sodium 90mg Sugar content: 30g or 19ml Sugar content per ml volume: 3.8 percent

Manufacturer: Nestle Philippines, Inc. Product: Nescafe Blend & Brew (20g pack)

8/30/2017 DEPARTMENT OF FINANCE 155

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 Sugar content per ml volume: 3.9 percent

Manufacturer: Mondelez International Product: Tang Orange (25g pack)

8/30/2017 DEPARTMENT OF FINANCE 156

Current price (PHP) Estimated new price (PHP) Percent increase 9.0 19.2 113.7

Serving size 5g or 200ml Servings per container 5 Calories 20 kcal Total fat 0g Protein 0g Total carbohydrates 5g Total sugar 3g Dietary fiber <1 g Sodium 40mg Sugar content: 15g or 10ml Sugar content per ml volume: 0.9 percent

Manufacturer: Nestle Philippines, Inc. Product: Nestea Lemon Blend Iced Tea (25g pack)

8/30/2017 DEPARTMENT OF FINANCE 157

Current price (PHP) Estimated new price (PHP) Percent increase 9.5 19.7 107.2

Serving size 5g Servings per container 5 Calories 19 kcal Total fat 0g Protein 0.08g Total carbohydrates 4.7g Sugar 3.9g Sodium 2mg

Sugar content: 20g or 12ml Sugar content per ml volume: 1.2 percent

8/30/2017 DEPARTMENT OF FINANCE 158

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)

8/30/2017 DEPARTMENT OF FINANCE 159

Current price (PHP) Estimated new price (PHP) Percent increase 36.25 43.4 19.72

Serving size 250ml Servings per container 1 Calories 170 cal Total fat 9g Protein 9g Total carbohydrates Sugar 12g 12g Sodium 125mg Cholesterol 31 mg Potassium 400 mg Sugar content: 12g or 8ml Sugar content per ml volume:

3.2 percent

Manufacturer: Selecta Product: Fortified milk (245 ml)

8/30/2017 DEPARTMENT OF FINANCE 160

Current price (PHP) Estimated new price (PHP) Percent increase 23.10 28.67 24.12

Serving size 245ml Servings per container 1 Calories 140 cal Total fat 8g Protein 8g Total carbohydrates 14g Dietary fiber Sugar 2 g 14 g Sodium 120 mg Cholesterol 30 mg Potassium 400 mg Sugar content: 9g or 6ml Sugar content per ml volume: 2.3 percent

Manufacturer: Nestle Product: Milo (180 ml)

8/30/2017 DEPARTMENT OF FINANCE 161

Current price (PHP) Estimated new price (PHP) Percent increase 21.50 26.88 25

Serving size 180ml Servings per container 1 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 Sugar content per ml volume: 5 percent

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Summary price impact

8/30/2017 DEPARTMENT OF FINANCE 162

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP10/liter tax per container (1/4)

8/30/2017 DEPARTMENT OF FINANCE 163

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

Coca-Cola Zero 355ml can

22.8 3.6 2.9 26.7 17 24

Coca-Cola Light 355ml can

22.8 3.6 2.9 26.7 17 24 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 Sprite Zero 330ml can 22.2 3.3 2.8 25.8 17 23 PHP 10/liter

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP10/liter tax per container (2/4)

8/30/2017 DEPARTMENT OF FINANCE 164

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)

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP10/liter tax per container (3/4)

8/30/2017 DEPARTMENT OF FINANCE 165

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)

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP10/liter tax per container (4/4)

8/30/2017 DEPARTMENT OF FINANCE 166

Proposal

Concentrates, per container

Old 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

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP5/liter tax per container (1/4)

8/30/2017 DEPARTMENT OF FINANCE 167

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 1.7 2.5 23.8 8 18 35

Pepsi 330ml can

21.5 1.8 2.5 23.5 9 18 41

Mountain Dew 355ml can

21.5 1.8 2.5 23.5 9 18 46

Sprite 355ml can

22.2 1.8 2.6 24.1 9 18 38

Royal Tru-Orange 330ml can

22.2 1.7 2.6 24.0 8 18 32

RC Cola 355ml plastic bottle

22.1 1.8 2.6 24.1 9 18 42

Sparkle 355ml glass bottle

12.0 1.8 1.5 14.0 17 23 46

7-Up 355ml can

22.2 1.8 2.6 24.1 9 18 37

Pop Cola 240ml glass bottle

8.0 1.2 1.0 9.3 17 24 45

Sarsi 240ml glass bottle

8.0 1.2 1.0 9.3 17 24 45

Mirinda 330ml can

24.5 1.7 2.8 26.3 8 17 36

Pepsi Max 330ml plastic bottle

21.5 1.7 2.5 23.3 9 18

Coca-Cola Zero 355ml can

22.8 1.8 2.7 24.7 9 18

Coca-Cola Light 355ml can

22.8 1.8 2.7 24.7 9 18 Coca cola Light 1.5L bottle 47.5 7.5 6.0 55.9 18 24 162 Coca Cola 1L bottle 31.0 5.0 3.9 36.6 18 24 108 Pepsi Max 1.5L bottle 46.5 7.5 5.9 54.9 18 24 Sprite Zero 330ml can 22.2 1.7 2.5 24.0 8 18 PHP 5/liter

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP5/liter tax per container (2/4)

8/30/2017 DEPARTMENT OF FINANCE 168

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)

Cobra 350ml plastic bottle

19.5 2.3 2.3 21.5 10 28 69

Gatorade 355ml plastic bottle

24.7 2.9 2.9 26.7 8 28 30

Sting 330ml plastic bottle

17.0 2.0 2.0 18.8 11 28 33

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

Tropicana Twister 355ml plastic bottle

23.5 2.7 2.7 25.5 8 18 36

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

Minute Maid 250ml plastic bottle

12.1 1.4 1.4 13.5 12 20 19

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP5/liter tax per container (3/4)

8/30/2017 DEPARTMENT OF FINANCE 169

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)

C2 355ml plastic bottle

15.8 1.8 1.9 17.7 13 21 46

Lipton 200ml plastic bottle

18.8 1.0 2.1 19.9 6 16 15

Real Leaf 250ml plastic bottle

19.0 1.3 2.2 20.4 7 17 26

ONE 355ml plastic bottle

18.5 1.8 2.2 20.5 11 19 27 PHP 5/liter

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP5/liter tax per container (4/4)

8/30/2017 DEPARTMENT OF FINANCE 170

Proposal

Concentrates, per container

Old 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

Extra Joss 4.6gram sachet

4.875 1.5 0.7 6.56 14 22

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

Nescafe Blend and Brew 20gram sachet

4.6 0.75 0.6 5.44 7 17 13 PHP 5/liter

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

8/30/2017 DEPARTMENT OF FINANCE 171

Proposal

Non-concentrates (RTD SSBs), per container

Old price (in PHP) Excise Tax VAT 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

Mountain Dew 355ml can

21.5 4.6 2.9 26.7 24 28 46

Sprite 355ml can

22.2 3.8 2.8 26.4 19 25 38

Royal Tru-Orange 330ml can

22.2 3.2 2.8 25.7 16 23 32

RC Cola 355ml plastic bottle

22.1 4.2 2.9 26.8 21 26 42

Sparkle 355ml glass bottle

12.0 4.6 1.8 17.2 43 38 46

7-Up 355ml can

22.2 3.7 2.8 26.3 19 25 37

Pop Cola 240ml glass bottle

8.0 4.5 1.4 13.0 63 45 45

Sarsi 240ml glass bottle

8.0 4.5 1.4 13.0 63 45 45

Mirinda 330ml can

24.5 3.6 3.1 28.5 16 23 36

Pepsi Max 330ml plastic bottle

21.5 0.0 2.3 21.5

Coca-Cola Zero 355ml can

22.8 0.0 2.4 22.8

Coca-Cola Light 355ml can

22.8 0.0 2.4 22.8 Coca cola Light 1.5L bottle 47.5 16.2 7.0 65.6 38 35 162 Coca Cola 1L bottle 31.0 10.8 4.6 43.1 39 36 108 Pepsi Max 1.5L bottle 46.5 0.0 5.0 46.5 Sprite Zero 330ml can 22.2 0.0 2.4 22.2 PHP 0.10/gram

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP0.10/gram tax per container (2/4)

8/30/2017 DEPARTMENT OF FINANCE 172

Proposal

Non-concentrates (RTD SSBs), per container

Old price (in PHP) Excise tax VAT New price (in PHP) Percentage increase in price Tax burden (in %) Sugar content (grams)

Cobra 350ml plastic bottle

19.5 6.9 2.9 27.2 40 36 69

Gatorade 355ml plastic bottle

24.7 3.0 3.0 28.1 14 21 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 0.8 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 2.5 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

Minute Maid 250ml plastic bottle

12.1 1.9 1.5 14.2 18 24 19

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP0.10/gram tax per container (3/4)

8/30/2017 DEPARTMENT OF FINANCE 173

Proposal

Non-concentrates (RTD SSBs), per container

Old price (in PHP) Excise Tax VAT New price (in PHP) Percentage increase in price Tax burden (in %) Sugar content (grams)

C2 355ml plastic bottle

15.8 4.6 2.2 20.9 33 33 46

Lipton 200ml plastic bottle

18.8 1.5 2.2 20.4 9 18 15

Real Leaf 250ml plastic bottle

19.0 2.6 2.3 21.9 16 23 26

ONE 355ml plastic bottle

18.5 2.7 2.3 21.5 16 23 27 PHP 0.10/gram

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP0.10/gram tax per container (4/4)

8/30/2017 DEPARTMENT OF FINANCE 174

Proposal

Concentrates, per container

Old price (in PHP) Excise tax VAT New price (in PHP) Percentage increase in price Tax burden (in %) Sugar content (grams)

Magnolia Fruit Drink Lemonade 400gram big sachet

46.0 32.2 5.1 82.1 78 50 322

Swiss Miss 31gram sachet

14.0 1.6 8.5 15.8 13 21 16

Tang 25gram sachet

9.0 2.0 1.2 11.2 25 29 20

Eight O'Clock 25gram sachet

8.5 2.4 1.0 11.2 32 32 24

Nestea 25gram sachet

9.5 2.0 1.3 11.7 23 27 20

Sunquick 850ml bottle

243.0 64.4 10.9 315.1 30 31 644

SM Bonus - Dalandan 350ml bottle

86.0 24.0 6.1 112.9 31 32 240

SM Bonus Honey Calamansi 350ml bottle

80.0 22.8 5.7 105.5 32 32 228

Nesfruta 25gram sachet

9.3 2.1 1.2 11.6 26 29 21

Eight O'Clock Iced Tea 25gram sachet

9.5 2.0 1.3 11.7 24 28 20

Extra Joss 4.6gram sachet

4.9 0.0 1.7 4.9 11

Lipton Iced Tea 25gram sachet

9.0 2.0 1.2 11.2 25 29 20

Sun Glo Mixers 25gram sachet

9.0 1.9 1.0 11.1 23 28 19

Eight O'Clock Ponkana 25gram sachet

10.3 2.1 1.4 12.7 23 28 21

Nescafe Blend and Brew 20gram sachet

4.6 1.3 3.4 6.0 30 32 13 PHP 0.10/gram

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP0.05/gram tax per container (1/4)

8/30/2017 DEPARTMENT OF FINANCE 175

Source: DOF staff estimates

Proposal

Non-concentrates (RTD SSBs), per container

Old price (in PHP) Excise Tax VAT 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

Mountain Dew 355ml can

21.5 2.3 2.6 24.1 12 20 46

Sprite 355ml can

22.2 1.9 2.6 24.3 10 19 38

Royal Tru-Orange 330ml can

22.2 1.6 2.6 23.9 8 17 32

RC Cola 355ml plastic bottle

22.1 2.1 2.6 24.5 11 19 42

Sparkle 355ml glass bottle

12.0 2.3 1.6 14.6 21 26 46

7-Up 355ml can

22.2 1.9 2.6 24.2 9 18 37

Pop Cola 240ml glass bottle

8.0 2.3 1.1 10.5 32 32 45

Sarsi 240ml glass bottle

8.0 2.3 1.1 10.5 32 32 45

Mirinda 330ml can

24.5 1.8 2.8 26.5 8 18 36

Pepsi Max 330ml plastic bottle

21.5 0.0 2.3 21.5

Coca-Cola Zero 355ml can

22.8 0.0 2.4 22.8

Coca-Cola Light 355ml can

22.8 0.0 2.4 22.8 Coca cola Light 1.5L bottle 47.5 8.1 6.1 56.6 19 25 162 Coca Cola 1L bottle 31.0 5.4 4.0 37.0 20 25 108 Pepsi Max 1.5L bottle 46.5 0.0 5.0 46.5 Sprite Zero 330ml can 22.2 0.0 2.4 22.2 PHP 0.05/gram

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP0.05/gram tax per container (2/4)

8/30/2017 DEPARTMENT OF FINANCE 176

Proposal

Non-concentrates (RTD SSBs), per container

Old price (in PHP) Excise tax 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 25 69

Gatorade 355ml plastic bottle

24.7 1.5 2.8 26.4 7 16 30

Sting 330ml plastic bottle

17.0 1.7 2.0 18.8 11 19 33

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

Tropicana Twister 355ml plastic bottle

23.5 1.8 2.7 25.5 9 18 36

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

Minute Maid 250ml plastic bottle

12.1 0.95 1.4 13.2 9 18 19

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP0.05/gram tax per container (3/4)

8/30/2017 DEPARTMENT OF FINANCE 177

Proposal

Non-concentrates (RTD SSBs), per container

Old price (in PHP) Excise Tax VAT New price (in PHP) Percentage increase in price Tax burden (in %) Sugar content (grams)

C2 355ml plastic bottle

15.8 2.3 2.0 18.3 16 23 46

Lipton 200ml plastic bottle

18.8 0.8 2.1 19.6 4 15 15

Real Leaf 250ml plastic bottle

19.0 1.3 2.2 20.4 8 17 26

ONE 355ml plastic bottle

18.5 1.4 2.1 20.0 8 17 27 PHP 0.05/gram

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP0.05/gram tax per container (4/4)

8/30/2017 DEPARTMENT OF FINANCE 178

Proposal

Concentrates, per container

Old price (in PHP) Excise tax VAT New price (in PHP) Percentage increase in price Tax burden (in %) Sugar content (grams)

Magnolia Fruit Drink Lemonade 400gram big sachet

46.0 16.1 3.1 64.0 28 36 322

Swiss Miss 31gram sachet

14.0 0.8 8.4 14.9 6 16 16

Tang 25gram sachet

9.0 1.0 1.1 10.1 11 21 20

Eight O'Clock 25gram sachet

8.5 1.2 0.9 9.8 14 23 24

Nestea 25gram sachet

9.5 1.0 1.1 10.6 10 20 20

Sunquick 850ml bottle

243.0 32.2 7.0 279.1 13 22 644

SM Bonus - Dalandan 350ml bottle

86.0 12.0 4.6 99.4 14 23 240

SM Bonus Honey Calamansi 350ml bottle

80.0 11.4 4.3 92.8 14 23 228

Nesfruta 25gram sachet

9.3 1.1 1.1 10.4 11 21 21

Eight O'Clock Iced Tea 25gram sachet

9.5 1.0 1.1 10.6 11 20 20

Extra Joss 4.6gram sachet

4.9 0.0 1.7 4.9 11

Lipton Iced Tea 25gram sachet

9.0 1.0 1.1 10.1 11 21 20

Sun Glo Mixers 25gram sachet

9.0 0.9 0.9 10.1 10 20 19

Eight O'Clock Ponkana 25gram sachet

10.3 1.1 1.2 11.5 10 20 21

Nescafe Blend and Brew 20gram sachet

4.6 0.6 3.4 5.3 13 23 13 PHP 0.05/gram

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP10/liter tax per liter equivalent (1/4)

8/30/2017 DEPARTMENT OF FINANCE 179

Source: DOF staff estimates Proposal

Non-concentrates (RTD SSBs), 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

Mountain Dew 355ml can

30.7 10.0 4.5 41.9 37 35 130

Sprite 355ml can

32.3 10.0 4.7 43.5 35 34 107

Royal Tru-Orange 330ml can

32.3 10.0 4.7 43.5 35 34 97

RC Cola 355ml plastic bottle

24.3 10.0 3.8 35.5 46 39 118

Sparkle 355ml glass bottle

24.3 10.0 3.8 35.5 46 39 130

7-Up 355ml can

31.0 10.0 4.5 42.2 36 34 104

Pop Cola 240ml glass bottle

33.3 10.0 4.8 44.5 34 33 188

Sarsi 240ml glass bottle

33.3 10.0 4.8 44.5 34 33 188

Mirinda 330ml can

32.0 10.0 4.6 43.2 35 34 109

Pepsi Max 330ml plastic bottle

31.0 10.0 4.5 42.2 36 34

Coca-Cola Zero 355ml can

32.3 10.0 4.7 43.5 35 34

Coca-Cola Light 355ml can

32.3 10.0 4.7 43.5 35 34 Sprite Zero 330ml can 32.3 10.0 4.7 43.5 35 34 PHP 10/liter

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP10/liter tax per liter equivalent (2/4)

8/30/2017 DEPARTMENT OF FINANCE 180

Proposal

Non-concentrates (RTD SSBs), 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)

Cobra 350ml plastic bottle

42.0 10.0 5.7 53.2 27 30 197

Gatorade 355ml plastic bottle

50.0 10.0 6.6 61.2 22 27 85

Sting 330ml plastic bottle

51.5 10.0 6.7 62.7 22 27 100

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

Tropicana Twister 355ml plastic bottle

54.0 10.0 7.0 65.2 21 26 101

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

Minute Maid 250ml plastic bottle

55.0 10.0 7.1 66.2 20 26 76

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP10/liter tax per liter equivalent (3/4)

8/30/2017 DEPARTMENT OF FINANCE 181

Proposal

Non-concentrates (RTD SSBs), 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)

C2 355ml plastic bottle

29.0 10.0 4.3 40.2 39 36 130

Lipton 200ml plastic bottle

54.0 10.0 7.0 65.2 21 26 75

Real Leaf 250ml plastic bottle

40.6 10.0 5.6 51.8 28 30 105

ONE 355ml plastic bottle

52.1 10.0 6.8 63.3 21 27 76 PHP 10/liter

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP10/liter tax per liter equivalent (4/4)

8/30/2017 DEPARTMENT OF FINANCE 182

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)

Magnolia Fruit Drink Lemonade 400gram big sachet

11.1 10.0 2.4 19.9 101 56 78

Swiss Miss 31gram sachet

77.8 10.0 9.5 79.4 14 22 89

Tang 25gram sachet

9.0 10.0 2.2 18.0 124 60 20

Eight O'Clock 25gram sachet

7.1 10.0 2.0 16.3 158 65 20

Nestea 25gram sachet

9.5 10.0 2.2 18.5 118 59 20

Sunquick 850ml bottle

29.4 10.0 4.3 36.2 38 35 78

SM Bonus - Dalandan 350ml bottle

29.9 10.0 4.4 36.7 38 35 83

SM Bonus Honey Calamansi 350ml bottle

27.8 10.0 4.2 34.8 40 36 79

Nesfruta 25gram sachet

9.3 10.0 2.2 18.3 121 60 21

Eight O'Clock Iced Tea 25gram sachet

9.5 10.0 2.2 18.5 118 59 20

Extra Joss 4.6gram sachet

16.3 10.0 2.9 24.5 69 47

Lipton Iced Tea 25gram sachet

9.0 10.0 2.2 18.0 124 60 20

Sun Glo Mixers 25gram sachet

7.5 10.0 2.0 16.7 149 64 16

Eight O'Clock Ponkana 25gram sachet

10.3 10.0 2.3 19.2 109 57 21

Nescafe Blend and Brew 20gram sachet

30.7 10.0 4.5 37.4 37 35 83 PHP 10/liter

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP5/liter tax per liter equivalent (1/4)

8/30/2017 DEPARTMENT OF FINANCE 183

Source: DOF staff estimates Proposal

Non-concentrates (RTD SSBs), 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 5.0 3.9 36.6 18 24 108

Pepsi 330ml can

31.0 5.0 3.9 36.6 18 24 115

Mountain Dew 355ml can

30.7 5.0 3.9 36.3 18 25 130

Sprite 355ml can

32.3 5.0 4.1 37.9 17 24 107

Royal Tru-Orange 330ml can

32.3 5.0 4.1 37.9 17 24 97

RC Cola 355ml plastic bottle

24.3 5.0 3.2 29.9 23 27 118

Sparkle 355ml glass bottle

24.3 5.0 3.2 29.9 23 27 130

7-Up 355ml can

31.0 5.0 3.9 36.6 18 24 104

Pop Cola 240ml glass bottle

33.3 5.0 4.2 38.9 17 24 188

Sarsi 240ml glass bottle

33.3 5.0 4.2 38.9 17 24 188

Mirinda 330ml can

32.0 5.0 4.0 37.6 18 24 109

Pepsi Max 330ml plastic bottle

31.0 5.0 3.9 36.6 18 24

Coca-Cola Zero 355ml can

32.3 5.0 4.1 37.9 17 24

Coca-Cola Light 355ml can

32.3 5.0 4.1 37.9 17 24 Sprite Zero 330ml can 32.3 5.0 4.1 37.9 17 24 PHP 5/liter

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP5/liter tax per liter equivalent (2/4)

8/30/2017 DEPARTMENT OF FINANCE 184

Proposal

Non-concentrates (RTD SSBs), 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)

Cobra 350ml plastic bottle

42.0 5.0 5.1 47.6 13 21 197

Gatorade 355ml plastic bottle

50.0 5.0 6.0 55.6 11 20 85

Sting 330ml plastic bottle

51.5 5.0 6.1 57.1 11 19 100

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

Tropicana Twister 355ml plastic bottle

54.0 5.0 6.4 59.6 10 19 101

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

Minute Maid 250ml plastic bottle

55.0 5.0 6.5 60.6 10 19 76

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP5/liter tax per liter equivalent (3/4)

8/30/2017 DEPARTMENT OF FINANCE 185

Proposal

Non-concentrates (RTD SSBs), 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)

C2 355ml plastic bottle

29.0 5.0 3.7 34.6 19 25 130

Lipton 200ml plastic bottle

54.0 5.0 6.4 59.6 10 19 75

Real Leaf 250ml plastic bottle

40.6 5.0 5.0 46.2 14 22 105

ONE 355ml plastic bottle

52.1 5.0 6.2 57.7 11 19 76 PHP 5/liter

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP5/liter tax per liter equivalent (4/4)

8/30/2017 DEPARTMENT OF FINANCE 186

Proposal

Concentrates, per 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)

Magnolia Fruit Drink Lemonade 400gram big sachet

11.1 5.0 1.8 16.7 50 41 78

Swiss Miss 31gram sachet

77.8 5.0 8.9 83.4 7 17 89

Tang 25gram sachet

9.0 5.0 1.6 14.6 62 45 20

Eight O'Clock 25gram sachet

7.1 5.0 1.4 12.7 79 50 20

Nestea 25gram sachet

9.5 5.0 1.6 15.1 59 44 20

Sunquick 850ml bottle

29.4 5.0 3.7 35.0 19 25 78

SM Bonus - Dalandan 350ml bottle

29.9 5.0 3.8 35.5 19 25 83

SM Bonus Honey Calamansi 350ml bottle

27.8 5.0 3.6 33.4 20 26 79

Nesfruta 25gram sachet

9.3 5.0 1.6 14.9 61 44 21

Eight O'Clock Iced Tea 25gram sachet

9.5 5.0 1.6 15.1 59 44 20

Extra Joss 4.6gram sachet

16.3 5.0 2.3 21.9 34 34

Lipton Iced Tea 25gram sachet

9.0 5.0 1.6 14.6 62 45 20

Sun Glo Mixers 25gram sachet

7.5 5.0 1.4 13.1 75 49 16

Eight O'Clock Ponkana 25gram sachet

10.3 5.0 1.7 15.9 54 42 21

Nescafe Blend and Brew 20gram sachet

30.7 5.0 3.9 36.3 18 25 83 PHP 5/liter

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

8/30/2017 DEPARTMENT OF FINANCE 187

Proposal

Non-concentrates (RTD SSBs), 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 10.8 4.6 43.1 39 36 108

Pepsi 330ml can

31.0 11.5 4.7 43.9 42 37 115

Mountain Dew 355ml can

30.7 13.0 4.8 45.2 47 39 130

Sprite 355ml can

32.3 10.7 4.7 44.3 37 35 107

Royal Tru-Orange 330ml can

32.3 9.7 4.6 43.2 34 33 97

RC Cola 355ml plastic bottle

24.3 11.8 4.0 37.6 54 42 118

Sparkle 355ml glass bottle

24.3 13.0 4.2 38.8 60 44 130

7-Up 355ml can

31.0 10.4 4.6 42.7 38 35 104

Pop Cola 240ml glass bottle

33.3 18.8 5.8 54.3 63 45 188

Sarsi 240ml glass bottle

33.3 18.8 5.8 54.3 63 45 188

Mirinda 330ml can

32.0 10.9 4.7 44.2 38 35 109

Pepsi Max 330ml plastic bottle

31.0 0.0 3.3 31.0 11

Coca-Cola Zero 355ml can

32.3 0.0 3.5 32.3 11

Coca-Cola Light 355ml can

32.3 0.0 3.5 32.3 11 Sprite Zero 330ml can 32.3 0.0 3.5 32.3 11 PHP 0.10/gram

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP0.10/gram tax per liter equivalent (2/4)

8/30/2017 DEPARTMENT OF FINANCE 188

Proposal

Non-concentrates (RTD SSBs), 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)

Cobra 350ml plastic bottle

42.0 19.7 6.9 64.1 53 41 197

Gatorade 355ml plastic bottle

50.0 8.5 6.4 59.5 19 25 85

Sting 330ml plastic bottle

51.5 10.0 6.7 62.7 22 27 100

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

Tropicana Twister 355ml plastic bottle

54.0 10.1 7.0 65.4 21 26 101

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

Minute Maid 250ml plastic bottle

55.0 7.6 6.8 63.5 15 23 76

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP0.10/gram tax per liter equivalent (3/4)

8/30/2017 DEPARTMENT OF FINANCE 189

Proposal

Non-concentrates (RTD SSBs), 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)

C2 355ml plastic bottle

29.0 13.0 4.7 43.5 50 40 130

Lipton 200ml plastic bottle

54.0 7.5 6.7 62.4 16 23 75

Real Leaf 250ml plastic bottle

40.6 10.5 5.6 52.4 29 31 105

ONE 355ml plastic bottle

52.1 7.6 6.5 60.6 16 23 76 PHP 0.10/gram

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP0.10/gram tax per liter equivalent (4/4)

8/30/2017 DEPARTMENT OF FINANCE 190

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)

Magnolia Fruit Drink Lemonade 400gram big sachet

11.1 8.7 2.2 47.2 325 79 78

Swiss Miss 31gram sachet

77.8 61.1 15.7 79.6 2 13 89

Tang 25gram sachet

9.0 7.1 1.8 11.2 25 29 20

Eight O'Clock 25gram sachet

7.1 5.6 1.4 9.8 38 35 20

Nestea 25gram sachet

9.5 7.5 1.9 11.7 23 27 20

Sunquick 850ml bottle

29.3 23.1 5.9 101.5 246 74 78

SM Bonus - Dalandan 350ml bottle

29.9 23.5 6.0 56.7 90 53 83

SM Bonus Honey Calamansi 350ml bottle

27.8 21.8 5.6 53.3 92 53 79

Nesfruta 25gram sachet

9.3 7.3 1.9 11.6 26 29 21

Eight O'Clock Iced Tea 25gram sachet

9.5 7.5 1.9 11.7 24 28 20

Extra Joss 4.6gram sachet

16.3 12.8 3.3 16.3 11

Lipton Iced Tea 25gram sachet

9.0 7.1 1.8 11.2 25 29 20

Sun Glo Mixers 25gram sachet

7.5 5.9 1.5 9.6 28 30 16

Eight O'Clock Ponkana 25gram sachet

10.3 8.1 2.1 12.7 23 28 21

Nescafe Blend and Brew 20gram sachet

30.7 24.1 6.2 32.1 5 15 83 PHP 0.10/gram

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP0.05/gram tax per liter equivalent (1/4)

8/30/2017 DEPARTMENT OF FINANCE 191

Source: DOF staff estimates

Proposal

Non-concentrates (RTD SSBs), 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 5.4 4.0 37.0 20 25 108

Pepsi 330ml can

31.0 5.8 4.0 37.5 21 26 115

Mountain Dew 355ml can

30.7 6.5 4.1 37.9 24 28 130

Sprite 355ml can

32.3 5.4 4.1 38.3 19 25 107

Royal Tru-Orange 330ml can

32.3 4.8 4.0 37.8 17 24 97

RC Cola 355ml plastic bottle

24.3 5.9 3.3 31.0 27 30 118

Sparkle 355ml glass bottle

24.3 6.5 3.4 31.6 30 31 130

7-Up 355ml can

31.0 5.2 3.9 36.8 19 25 104

Pop Cola 240ml glass bottle

33.3 9.4 4.7 43.8 32 32 188

Sarsi 240ml glass bottle

33.3 9.4 4.7 43.8 32 32 188

Mirinda 330ml can

32.0 5.5 4.1 38.1 19 25 109

Pepsi Max 330ml plastic bottle

31.0 0.0 3.3 31.0 11

Coca-Cola Zero 355ml can

32.3 0.0 3.5 32.3 11

Coca-Cola Light 355ml can

32.3 0.0 3.5 32.3 11 Sprite Zero 330ml can 32.3 0.0 3.5 32.3 11 PHP 0.05/gram

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP0.05/gram tax per liter equivalent (2/4)

8/30/2017 DEPARTMENT OF FINANCE 192

Proposal

Non-concentrates (RTD SSBs), 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)

Cobra 350ml plastic bottle

42.0 9.9 5.7 53.0 26 29 197

Gatorade 355ml plastic bottle

50.0 4.2 5.9 54.7 9 18 85

Sting 330ml plastic bottle

51.5 5.0 6.1 57.1 11 19 100

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

Tropicana Twister 355ml plastic bottle

54.0 5.1 6.4 59.7 11 19 101

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

Minute Maid 250ml plastic bottle

55.0 3.8 6.3 59.3 8 17 76

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP0.05/gram tax per liter equivalent (3/4)

8/30/2017 DEPARTMENT OF FINANCE 193

Proposal

Non-concentrates (RTD SSBs), 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)

C2 355ml plastic bottle

29.0 6.5 3.9 36.3 25 29 130

Lipton 200ml plastic bottle

54.0 3.8 6.2 58.2 8 17 75

Real Leaf 250ml plastic bottle

40.6 5.3 5.0 46.5 14 22 105

ONE 355ml plastic bottle

52.1 3.8 6.0 56.4 8 17 76 PHP 0.05/gram

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Price impact of PHP0.05/gram tax per liter equivalent (4/4)

8/30/2017 DEPARTMENT OF FINANCE 194

Proposal

Concentrates, per 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)

Magnolia Fruit Drink Lemonade 400gram big sachet

11.1 3.9 1.7 15.5 39 66 78

Swiss Miss 31gram sachet

77.8 0.8 8.4 78.7 1 12 89

Tang 25gram sachet

9.0 1.0 1.1 10.1 12 21 20

Eight O'Clock 25gram sachet

7.1 1.0 0.9 8.2 16 25 20

Nestea 25gram sachet

9.5 1.0 1.1 10.6 11 20 20

Sunquick 850ml bottle

29.3 3.9 3.6 33.7 15 60 78

SM Bonus - Dalandan 350ml bottle

29.9 4.2 3.7 34.5 16 38 83

SM Bonus Honey Calamansi 350ml bottle

27.8 4.0 3.5 32.2 16 39 79

Nesfruta 25gram sachet

9.3 1.1 1.1 10.4 13 21 21

Eight O'Clock Iced Tea 25gram sachet

9.5 1.0 1.1 10.6 12 20 20

Extra Joss 4.6gram sachet

16.3 0.0 1.7 16.3 11

Lipton Iced Tea 25gram sachet

9.0 1.0 1.1 10.1 12 21 20

Sun Glo Mixers 25gram sachet

7.5 0.8 0.9 8.4 12 22 16

Eight O'Clock Ponkana 25gram sachet

10.3 1.1 1.2 11.5 12 20 21

Nescafe Blend and Brew 20gram sachet

30.7 0.6 3.4 31.4 2 13 83 PHP 0.05/gram

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

Non-tax measures

8/30/2017 DEPARTMENT OF FINANCE 196

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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

• Complementary non-tax measures are being
• rganized 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.

8/30/2017 DEPARTMENT OF FINANCE 197

Source: DOH position paper on SSB

DRAFT FOR DISCUSSION. SUBJECT TO CHANGE.

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.

8/30/2017 DEPARTMENT OF FINANCE 198