Beverage Group Urges Gov’t To Defer Proposed Drinks Tax Hike Amid Rising Prices

Increasing the sweetened beverage (SB) tax by 233 percent under the government’s proposed tax reform package could add to the financial burden on consumers amid rising prices of basic commodities and create challenges for sari-sari stores selling the affected products, according to the Beverage Industry Association of the Philippines (BIAP).

BIAP president Juan Lorenzo Tañada, speaking at the Kapihan sa Manila Bay forum on Oct. 7, said the government should hold off on increasing the SB tax amid inflationary pressures stemming from the Middle East crisis and resulting inflation on food and transportation costs.

Under the Promoting Growth, Revenue, and Equity towards Socio-economic Sustainability or ProGRESS bill, the proposed excise tax would increase from ?6 to ?20 per liter for beverages using sugar or other caloric or non-caloric sweeteners, and from ?12 to ?40 per liter for those using high-fructose corn syrup (HFCS).

The proposed increase aims to generate additional government revenue for public services and priority programs while supporting public health efforts to reduce excessive sugar consumption.

Looking at the country’s economic performance, BIAP noted that gross domestic product grew by only 2.3 percent in the second quarter of 2026, the weakest quarterly growth since the pandemic and well below the government’s six percent target. Meanwhile, inflation rose to 7.2 percent in September from 6.1 percent in August, driven largely by higher food prices.

“Sa sitwasyon nating ‘to na meron tayong Middle East crisis, fuel prices have gone up tremendously...Baka hindi po ngayon ang panahon para gawin 'yon (Given our current situation with the Middle East crisis and the tremendous increase in fuel prices, perhaps now is not the right time to implement the measure)," he stressed, referring to the implementation of higher SB tax.

Further, the proposed measure could also affect the micro, small, and medium enterprises (MSMEs) like sari-sari stores and small groceries, which are a backbone of the Philippine economy.

Around 1.3 million sari-sari stores generate a portion of their sales from beverage products, Tañada said. These neighborhood stores, which account for an estimated 63.5 percent of manufactured consumer food product sales, could face lower consumer demand and tighter retail margins as prices rise.

Government projections under the ProGRESS Bill indicate that beverage volume sales could decline by a further 27.2 percent by 2027 if the proposed tax increase takes effect. The impact could extend to low-income households, which make up a significant share of consumers of these packaged beverages.

Assessing the health impact

Philippine Institute for Development Studies (PIDS) senior research fellow John Paolo Rivera, speaking at the same forum, emphasized the need to assess the proposed tax increase’s potential health benefits, particularly its effectiveness in reducing sugar consumption and curbing obesity.

“Ang obesity kasi ay multidimensional. Hindi lamang ito, halimbawa, na naaapektuhan ng pagpapataw ng buwis; marami pang ibang salik o aspeto na puwedeng makaapekto sa obesity (Obesity is multidimensional. It is not influenced by taxation alone; many other factors can also affect obesity),” Rivera said, noting that lifestyle, age, demographics, and education also influence obesity outcomes.

He stressed that policy decisions should be guided by evidence, including how different socioeconomic groups may be affected.

Beyond taxation, he highlighted the importance of complementary measures, such as public education campaigns, to raise awareness and encourage healthier choices.

Call for open dialogue

Tañada said the proposed tax increase should be put on hold pending further studies and meaningful consultations with affected stakeholders, including industry players, consumers, agricultural groups, and MSMEs. To date, there has not been evidence to link SB taxation in the Philippines with improvement of health of Filipinos.

He explained that reforms backed by broad consensus are more likely to gain support and address the concerns of stakeholders.

“We have to be very, very clear in what we want to achieve, on the health front and on the revenue front,” Tañada said, adding that the private sector remains open to dialogue and willing to contribute to solutions.

“We recognize there’s a problem […] we need to be part of the solution, and we’re staying to be part of it,” he added.