The government's proposal to increase tariffs on artificial sweeteners is expected to have only a short-term impact on customs duty collections, with users eventually turning to domestic sugar, officials and analysts said.
Customs Commissioner Ariel F. Nepomuceno said the plan to impose tariff increases on sugar substitutes does not guarantee an increase in the agency's collections due to the availability of domestically produced substitutes.
“Imposing higher tariffs on artificial sweeteners may not automatically increase customs collections if the source and use of domestic sugar becomes cheaper,” he pointed out. businessworld Via Viber.
Agriculture Secretary Francisco P. Tiu Laurel Jr. said last week that the government is considering raising the current 5% duty on sugar substitutes to curb rising imports and protect domestic producers.
Mr. Laurel said he has begun discussions with Finance Secretary Frederick D. Go on the appropriate tariff level, adding that the Finance Department will decide on the final rate.
The Bureau of Customs (BOC) aims to collect P1.003 trillion this year.
Citing reforms and new leadership, Mr. Go expressed confidence that the BOC will hit the P1‑trillion mark in 2026.
The BOC earned revenues of P934.4 billion last year, but it missed the target of P958.7 billion, after its collections declined following a mid-year ban on rice imports.
On the other hand, University of Asia and the Pacific Associate Professor George N. Manzano said beverage and food manufacturers may not be able to switch to domestic sugar overnight and may instead choose to continue importing and absorbing higher costs.
“In the short term, government revenues are likely to increase. In the longer term, the impact on sugar and related industries will depend on how big the tariffs are and how businesses respond,” he said via Viber.
If artificial sweeteners become expensive, some companies may turn to domestic sugar, which would boost agriculture, or prompt investors to consider making sweeteners domestically if tariffs remain high.
“On the other hand, if tariffs are too high, manufacturers may import finished products (such as beverages or processed foods) instead of producing locally. This could harm rather than help domestic food manufacturers,” he said.
Leonardo A., Professor of Economics at the Ateneo de Manila University. Lanzona said consumers would ultimately have to bear the cost of the import duties.
“The DA has often resorted to tariffs as a solution to many of its supply side problems. They fail to consider its impact on the consumer in addition to increasing government revenue,” he said via messenger chat.
He said the DA should invest in facilities and industrial support to help sugar producers compete globally.
The government has imposed a suspension on sugar imports until the end of the year, except quantities sent in exchange for exported sugar.
“More importantly, domestic industry must work on its own to be more productive and not rely on government subsidies and other forms of trade protection,” he said.
Calixto V. Chiquiamco, president of the Foundation for Economic Freedom, said the measure was unlikely to alleviate the sugar industry's structural problems.
“Banning artificial sweeteners, which may have market demand, could reduce demand for finished products or shift demand to imported finished products using artificial sweeteners,” he said via Viber.
Mr Chikiamko said the industry is also grappling with the challenge of a global shift away from sugar, which is increasingly seen as unhealthy.
“Local sugar prices are already double the world market price, causing a competitive disadvantage to our downstream industries that use sugar such as beverages, confectionaries, baked goods,” he said. — Aubrey Rose A. innocente