Philippines sugar tax: ‘Watered-down’ policy will lead to fewer health gains

The tax that came into force was modified from its original version after a consultation period, with health campaigners expressing concerns that industry had too big an influence.

In 2018, in response to the escalating rates of obesity, the Philippine government proposed a tax on sugar sweetened beverages (SBs) as part of a broader tax reform (Republic Act 10963 Section 47).

This tax applies to various SB categories, including sweetened juice drinks, sweetened teas, carbonated beverages, flavored waters, energy and sports drinks, powdered drinks, cereal and grain-based beverages, and other beverages containing added sugar.

Preliminary evidence suggested that this policy could enhance public health by reducing energy and sugar intake through SBs, thereby mitigating the risk of obesity and related health conditions.

Therefore a new study aimed to assess and compare the relative health and economic impact of the initially proposed sugar-sweetened beverage (SB) tax with the version that was ultimately implemented.

Modifications to the policy framework encompassed a reduced tax rate and the exemption of certain products from taxation.

The findings from the study suggest that the currently enforced sweetened beverage tax policy is likely to be highly cost effective, while also resulting in substantial healthcare cost savings and government revenue.

However, the researchers state that overall health benefits will not be as significant as hoped.

“The implemented tax was modelled to result in a 43% smaller reduction in targeted beverage intake, a 44% smaller reduction in BMI, 40% fewer long term health gains (quantified as health-adjusted life years), 40% fewer healthcare cost savings, and 28% less government taxation revenue. It is likely that corporate lobbying by the beverage industry is responsible for at least part of the missed potential benefits from this policy.”

Although the tax currently in place in the Philippines is expected to have a positive impact on public health, it is likely to offer fewer advantages compared to the original suggested tax.

The sway of the food and beverage industry on policy procedures has the potential to lessen the benefits of policies aimed at preventing non-communicable diseases (like obesity) within the population, the researchers warned.

They added: “In the case of the Philippines, there is evidence that food industry CPA, and their lobbying activities in particular, influenced the final version of the 2018 SB tax design, making it more favourable for the beverage industry (and less effective from a public health perspective) than the initially proposed SB tax (House Bill 292, 17th Congress).

“Specific changes attributed to industry influence included reductions in the tax rate (for beverages sweetened by caloric and non-caloric sweeteners other than high fructose corn syrup) and the exclusion of sweetened coffee-based beverages. Coffee-based beverages are the second most consumed beverage in the Philippines behind water, and 3-in-1 instant mixes (coffee, sugar and cream powder) are particularly popular.

“Coffee-based beverages are also consumed amongst children and adolescents in the Philippines.

“Our study provides support for the continuation and expansion of the Philippine sweetened beverage tax. However, it also provides evidence of the need for strong conflicts of interest and transparency policies, in the Philippines and other lower-middle income countries in the Western Pacific region.”

Study: A comparative analysis of the cost-utility of the Philippine tax on sweetened beverages as proposed and as implemented

Source: The Lancet

DOI:https://doi.org/10.1016/j.lanwpc.2023.100912

Authors: Oliver Huse, et al

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