Asia Brewery opposes 140% tax hike on beer

Posted at 02/20/2012 4:24 PM | Updated as of 02/20/2012 6:21 PM

MANILA, Philippines - Asia Brewery, Inc., the Lucio Tan-led company that makes Beer na Beer and Colt 45, is against a proposed measure that seeks to impose a 140% increase in taxes on low-priced beer.

In a statement, Asia Brewery noted that the Department of Finance-sponsored House Bill No. 5727 will increase the excise tax of low-priced beer to P25 per liter from the current P10.41 per liter.

Low-priced beer reportedly comprises 75% of all current beer brands sold in the market.

Under the same proposal, the excise tax on high-end beer brands, including imported brands, will only jump by 21%.

"The resulting price increases from the new tax imposition will lead to the collapse of ABI’s beer market. Worse, it will take with it a large portion of the barangay-based distribution and retail businesses depending on the company," said Asia Brewery chief finance officer Enrique Martinez, in a statement.

Martinez urged lawmakers to junk the single tax rate proposed by the DoF and instead maintain a multi-tiered tax system, which he said takes into account the customer’s purchasing power.

"The idea is simple: ABI believes it is unfair to impose the same tax on minimum wage earners who patronize low-priced brews vis-à-vis the rich who consume expensive beer brands," he said.

Martinez said the DoF proposal is "anti-poor since dampened demand will lead to lower tax revenues that will ultimately deprive the masses of basic government services."

The proposal may also lead to job losses and loss of livelihood opportunities for thousands of poor families, who depend on the distribution and retail sales of these low-priced malt-based beverages.

When the 20% increase in excise tax was implemented in 2005 under Republic Act 9334, Martinez noted that Asia Brewery's volume removals and excise tax payments declined by 41% and 24%, respectively, from 2005 to 2008.

"If this is the effect of a 20% increase in excise tax on our beer sales, we believe a 140% tax hike will lead to at least 50% drop in ABI’s and the industry’s sales volumes. A volume decrease of this magnitude will threaten the viability of Asia Brewery and even the beer industry itself," he said.

Martinez said thousands of workers in manufacturing plants, as well as transportation and logistics, small distributors and sari-sari store owners will be affected as people shun the higher-priced beer.