Why the same tax for local sugar and imported artificial substitutes

A PROPOSAL to have the same tax for locally-produced sugar and imported artificial sweeteners is worrying the Sugar Regulatory Administration, which said that this will just hasten the demise of the local sugarcane sector.

SRA Administrator Pablo Luis Azcona said hiking the current two-tiered tax bracket for sugar-sweetened beverages (SSB) while retaining cane sugar in the same category as artificial sweeteners would further encourage importation of substitutes, whose prices could equal, if not be lower than, local sugar.

At present, SSB containing cane sugar and artificial sweeteners (sucralose, aspartame, saccharin, and acesulfame potassium) are taxed P6 per liter while the levy for those with high-fructose corn syrup (HFCS) is P12 per liter.

Although the Department of Finance (DOF) wants to raise the lower tax bracket (P6 per liter) to P20 per liter and the higher tax bracket (P12/liter) to P40 per liter it still maintains the status of artificial sweeteners in the can sugar category, thus perpetuating the inequity.

The SRA fears that if the SSB tax on sugar is raised, (there would be a repeat of the 2018 situation),” Azcona said.

When the tax for HFCS was increased to P12 per liter in 2018, he said manufacturers shifted to artificial sweeteners which placed them in the lower tax bracket together with cane sugar.

“So, over the years, as the sugar price was increasing, their use of artificial (sweeteners) was also increasing.”

SRA issued Sugar Order (SO) 5, which imposes a clearance fee on the importation of artificial sweeteners under Harmonized System (HS) codes 2106 and chapter 29, which are used in the manufacture of food and beverages.

This includes, but is not limited to, any form or concentration of sucralose, aspartame, saccharin, acesulfame potassium, and processed stevia.

The agency decided to issue the order following consultative meetings in which stakeholders raised their “grave concern” on the effects of “the long-practiced unregulated importation into the country of artificial sweeteners” on the local sugar sector.

Stakeholders comprising farmers, millers, and refinery groups recently issued a joint statement asking the retention of the P6 per liter tax imposed on beverages manufactured with local cane sugar.

Drinks using any sweetener other than pure cane sugar and imported sweetened beverages should be taxed P40 per liter in effect supporting foreign manufacturers, they added.

The groups pointed out that from an unrecorded volume of imported artificial sweetener imports prior to the TRAIN Law of 2018, shipments zoomed and cornered 18.4 percent of the market or 503,117 metric tons (MT) in sugar equivalent for crop years 2023-2024 and 2024-2025.