Impose sugar tax on manufacturers, not consumers, says think tank

The Galen Centre for Health and Social Policy says over the long run, consumers will become desensitised to the increase in price due to the sugar tax.

KUALA LUMPUR: A think tank today advised the government to impose the excise duty on sweetened beverages announced in Budget 2019 on manufacturers instead of at the point of retail, saying this would be more effective than relying on consumers to reduce their sugar consumption.

The Galen Centre for Health and Social Policy welcomed the move to impose a tax of 40 sen per litre on such beverages but warned that the results from other countries which had adopted similar measures were mixed.

According to studies from the UK, Chile and Mexico, it said, such measures were effective in the short term on young consumers in the age bracket of 13-30 years who were price-sensitive.

“(They) will very likely reduce their sugar consumption by up to 80%,” Galen chief executive Azrul Mohd Khalib said in a statement.

Older consumers, on the other hand, were unlikely to change their habits and would remain relatively insensitive to price increases.

“In the long term, consumers will very likely be desensitised to the price difference, requiring additional tax increases in the future,” he added.

He suggested that Putrajaya impose the tax on manufacturers as is the practice in the UK, saying this would incentivise them to reduce the sugar content in their products to avoid being taxed.

“The truth is, we cannot depend on Malaysian consumers to change and adopt healthy choices and habits.”

With the tax on sweetened beverages, he said, consumers would simply switch to other alternatives such as sirap bandung, Milo, teh tarik or kopi susu.

“The list is long and arguably more problematic than soda drinks as they are consumed by the majority of consumers. These beverages will unfortunately escape taxation.”

Azrul also proposed that the revenue collected from the sugar tax be channelled towards health programmes designed to deal with non-communicable diseases (NCD) such as diabetes and cancer, as well as risk factors such as obesity.

“Earmarking this revenue, along with that collected from tobacco and alcohol, will help address the current shortfall in funding for NCD prevention programmes,” he said. - FMT