Republic of the Phil
HOUSE OF REPRI
Quezon City

ines
‘ATIVES

17" Congress
First Regular Session

HOUSE BILL NO. 4005

Introduced by: HON. JOSE ANTONIO R. SY-ALVARADO.

EXPLANATORY NOTE

According to the International Diabetes Federation, the Philippines is one of world’s
emerging diabetes hotspots. Ranked in the top 15 in the world for diabetes prevalence,
Philippines is home to more than 4 million people diagnosed with the disease and a worrying
large unknown number who are unaware they have diabetes. Moreover, the National
Nutrition Council warned in 2016 that three out of ten Filipino adults are now obese.

Globally, fiscal meastires such as taxes are increasingly recognized as effective
complementary tools to help tackle the aforementioned health concems, Taxes can play a key
role in correcting for market failures and act as a price signal that could influence purchasing
decisions of consumers.

Following on the said premises, and in accordance with the current administration’s
10-point economic agenda, is the cornerstone for this bill to impose excise tax on sugar-
sweetened beverages (SSB), to dedicate the revenues from such tax to the prevention,
treatment and research of diabetes and other diet-related health conditions, and for other
purposes.

‘The most accurate baseline for the harm caused by SSBs is its added sugar
content, Hence, this bill adopts the tax base of sugar content to impose the excise tax for the
perceived advantage of better targeted and the tax is in direct proportion to the level of added
sugar in SSB.

A study of Public Health England suggests that a twenty-percent (20%) price increase
of SSBs may be required to have a significant impact on purchases, consumption, and
ultimately on obesity and population health. Henee, it is proposed a tax rate of nine centavos
(P0,09) per gram of sugar be implemented that roughly equates to a twenty-percent (20%) tax
incidence based on one of the most popular soft drink,

This bill seeks to support the new administration’s policies to pursue refpetis in
income tax rates; therefore the approval of this bill is earnestly sought

JOSE ANTOMO R. SY-ALVARADO


»

Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

17" Congress
First Regular Session

uouse pitt xo, 4005

Introduced by: HON. JOSE ANTONIO R.

SY-ALVARADO.

AN ACT IMPOSING
INSERTING A NEW

EXCISE TAX ON SUGAR-SWEETENED BEVERAGES (SSBs) BY
;CTION 150-A IN THE NATIONAL INTERNAL REVENUE CODE
OF 1997, AS AMENDED

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION 1. A new section designated as Section 150-A under Chapter VI Title VI of the
National Internal Revenue Code (NIRC) of 1997, as amended is inserted to read as follows:
“SEC. 150-A/ SUGAR-SWEETENED BEVERAGES (SSBs). —

(A) Rate and Base of Tax. ~ There shall be levied, assessed, and collected on
sugar-sweetened beverages an excise tax of 9 centavos (Php 0.09) per gram of
sugar or any caloric sweetener contained in such specified sugar-sweetened
beverage product. The manufacturer, producer, or importer shall be liable for the tax
imposed on the sale or transfer of any specified sugar-sweetened beverage product.

(B) Definitions —
1. Sugar-sweetened beverage (SSB) products means -

a. Any liquid intended for human consumption which contains sugar or caloric
‘sweetener; and

b. Any liquid, or solid mixture of ingredients, which contains sugar or caloric
sweetener and is intended for use as an ingredient in a liquid described in sub-
paragraph (a).

2, Caloric Sweetener - For purposes of this part, the term ‘caloric sweetener’ means
monosaccharides, disaccharides, and high-fructose com syrup.

(C)_ Exceptions — the following shall not be included from the scope of this act.

a. Any liquid the primary ingredients of which are milk or soy, rice, or similar plant-
based milk substitute.

b. Any liquid composed entirely of one or more of the following
i. The original liquid resulting from the pressing of fruit or vegetables.
ii, The liquid resulting from the reconstitution of fruit or vegetable juice
concentrate.
ili. The liquid resulting from the restoration of water to dehydrated fruit or
vegetable juice.


«. Infant formula

4. Any liquid products manufactured for use as—
i, an oral nutritional therapy for persons who cannot absorb or metabolize
dietary nutrients from food or beverages,
ii, a source of necessary nutrition used due to a medical condition, or
iil, an oral electrolyte solution for infants and children formulated to prevent
dehydration due to illness.

(0) Reportorial Requirement and Penalty.

a, Reportorial Requirement — Manufacturers, producers, and Importers of SSBs
shall, within thirty (30) days from the effectivity of this act, and within the first five
(6) days of every third month thereafter, submit to the Commissioner a sworn
statement of the total contents of sugar or any caloric sweetener for each
particular brand of SSB sold at their establishment for the three-month period
immediately preceding,

b. Penalty — Upon final findings by the Commissioner that any manufacturer,

producers, or importer, in violation of this section, misdeclares or misrepresents
in the sworn statement herein required, any pertinent data or information, the
penalty of summary cancellation or withdrawal of the permit to engage in
business as manufacturer, producers, or importer of SSBs, shall be imposed
Any Corporation, Association or partnership liable for any of the acts or omissions
in violation of this section shall be fined treble the amount of deficiency taxes,
surcharges and interest which may be assessed pursuant to this section.
‘Any person liable for any of the acts or omissions prohibited under this section
shall be criminally liable and penalized under section 254 of the National Internal
Revenue of 1997, as amended. Any person who willfully aids or abets in the
commission of any such act or omission shall be criminally liable in the same
manner as the principal.

SECTION 2. Specific Responsibility of the Food and Drug Administration (FDA)

The FDA shall oblige all manufacturers, producers, and importers to state on the
label that caloric or non-caloric sweetener is added to the SSBs.

The FDA shall validate the SSBs to determine the caloric and non-caloric sweetener
content of the SSBs as specified on the label before these products are sold to the
consumers. It shall also oblige all manufacturers, producers, and importers of SSBs in
powder form to indicate on the label, the equivalent of each serving in grams contained in
such specified SSB.

The FDA shall also conduct random inspection of the SSBs on display in
supermarkets, groceries or retail stores to determine compliance with the requirement of this
Act.

SECTION 3. Health Promotion Fund ~ The revenue to be collected under this Act shall be
allocated for the following purposes

a. Thirty percent (30%) of the tax collection shall accrue to the General Fund,

b. Thirty percent (30%) shall accrue to the Department of Health for the provision of
medicine and medical assistance for diabetes and other non-communicable
diseases through Provincial or District Hospitals as well as for health and
wellness promotion;

c. Twenty percent (30%) shall be given to the Provincial or District Hospitals.

d. Five Percent (5%) shall accrue to the Department of Agriculture to support those
affected sugarcane farmers.

e. Five Percent (5%) shall accrue to the establishment of the drug rehabilitation
centers in the entire country.


SECTION 4, Prohibited Acts ~ It shall be unlawful for any person to mislabel, and falsely
declare the caloric and non-caloric sweetener content of the SSBs handled or manufactured
for sale, offered for sale, distributed in commerce, or imported into the Philippines.

SECTIOON 5. Penalty — Any person who shall violate Section 4 of this Act shall suffer the
penalties provided under Section 38 of Republic Act No. 10611, otherwise known as the,
“Food Safety Act of 2013.”

SECTION 6. Implementing Rules and Regulations ~ Within ninety (90) days fro the
approval of this Act, the Secretary of Finance, upon the consultation with the Secretary of
Budget and Management, Commissioner of the Bureau of Internal Revenue and the
Administrator of the Food and Drug Administration shall promulgate the necessary rules and
regulations for the effective implementation of this Act: Provided that, the failure of the
Secretary of Finance to promulgate the said rules and regulations shall not prevent the
implementation of this Act upon its effectivity,

SECTION 7. Separability Clause ~ If any part of this Act shall be held unconstitutional or
invalid, other parts nor otherwise affected thereby shall remain in force and effect,

SECTION 8. Repealing Clause ~ All laws, decrees, resolutions, orders, or ordinances or
parts thereof inconsistent with this Act are herby repealed amended or modified accordingly.

SECTION 9. Effectivity

he Act shall take effect fifteen (15) days after its publication in
the Official Gazette or

‘one newspaper of general circulation.

Approved,