Sugar industry awaits TRAIN Law benefits

Published November 17, 2019, 12:00 AM

by manilabulletin_admin

By Madelaine B. Miraflor

Nearly two years since the Tax Reform for Acceleration and Inclusion (TRAIN) law was passed, the Sugar Regulatory Administration (SRA) is still wondering how the government intends to distribute portions of the revenues from the excise tax on sugar sweetened beverages (SSBs) to the sugarcane industry.

SRA Board Member Emilio Yulo said that until now, the local sugar industry has not benefited from the SSB tax.

Excise tax on SSBs is one of the taxes imposed under TRAIN or Republic Act (RA) 10963, which took effect on January 1, 2018.

Once without taxes, SSBs are now taxed P6 per liter, while drinks with high fructose corn syrup (HFCS) at P12 per liter.

Under the law, not more than 30 percent of TRAIN’s incremental revenues should go to programs of Sugarcane Industry Development Act of 2015 (SIDA) “to advance the self-reliance of sugar farmers that will increase productivity, provide livelihood opportunities, develop alternative farming systems and ultimately enhance farmers’ income”.

Yulo said the SRA intends to seek clarity as to how this should work since it wasn’t specified in the law how the SSB tax revenue will be injected into SIDA or any other programs in the local sugar industry.

For the entire 2018, when the total tax collections from alcohol, tobacco, and sugar-sweetened beverages supposedly reached ₱242.8 billion, only ₱500 million went to SIDA.

The problem is that for next year, a massive budget cut is also threatening the implementation of SIDA, with the Department of Budget and Management (DBM) considering to allot only P67 million to the law’s implementation.

“We still have SIDA to take care of,” Yulo said. “So this [SSB tax revenues] is something to be lobbied for in the 2021 budget”.

Based on RA 10963, SRA was supposed to be part of the interagency committee – chaired by the Department of Budget and Management (DBM) and co-chaired by Department of Finance and Department of Social Welfare and Development – that was formed to oversee the identification of qualified beneficiaries of the TRAIN law.

Senator Cynthia Villar, chair of the Committee on Agriculture and Food, has proposed to DBM to increase the budget for SIDA in 2020 to at least P1.5 billion.

SIDA was supposed to receive a combined amount of P8 billion in the last four years or P2 billion every year since its creation, but SRA Board Member Roland Beltran said only “more or less P3 billion” were actually made available to bankroll the law’s goals. And four years into the law’s implementation, the Philippines still has low sugar yield at 5.1 tons per hectare.

In another development, some of the country’s big sugar planters are planning to help the smaller farmers in order to increase the total sugar production of the Philippines.

This, as the declining sugar output and high retail prices for the sweetener are two of the main reasons why the country’s economic managers want to liberalize the sugar industry and allow the unimpeded importation of the commodity.

For the current sugar crop year, the country’s total raw sugar production may only reach 2.1 million metric tons (MT), unchanged from the previous year, with cane production expected to be about 22 million MT.

Consumption, on the other hand, will increase slightly to 2.3 million MT as demand for domestic and imported sugar by industrial users (i.e. beverages and processed food manufacturers) rises due to import restrictions and increased taxes on beverages using sugar substitutes like high fructose corn syrup. Thus, the need for sugar imports.

Gerardo Locsin, a member of Tatak Kalamay, said the big sugar planters are now preparing to help the smaller farmers to increase their output.

“It’s like a big brother approach,” Locsin said, adding that the annual target will be pegged at 10 percent increase in production starting in the next crop year. The country’s sugar crop year starts in September and ends in August the following year.

Tatak Kalamay is a group of sugar farmers, producers, and millers. It represents more than 300,000 individual-members in the sugar industry across different parts of the country.

Yulo said this, among other things, should be discussed in a nationwide ‘sugar summit’ that is being planned for next year.