Thais love sweet drinks, says green tea maker Ichitan © Panom Kimsue/123RF
Thais love sweet drinks, says green tea maker Ichitan © Panom Kimsue/123RF

Thailand declares war on sugar with tax

posted by Su-San Sit
in Law
13 December 2017

Confronted with rising obesity rates and health care costs, the Thai government has introduced an excise tax aimed at pushing beverage makers into making less sugary drinks.

Governments around the world have been weighing introduction of taxes on sugary beverages in order to stem health epidemics, including diabetes and obesity. The World Health Organisation, which has backed the levies, said last month that child and teen obesity had soared tenfold in four decades.

The Thai government began raising taxes on soft drinks with high sugar content in September, with the levy set to rise in stages over the next six years.

Previously, imported beverages were taxed at 20% on the wholesale price. The new system cuts that down to 14% but adds a tariff on beverages with over 6g of sugar per 100ml.

However, a report by the US Department of Agriculture said the excise tax will affect around $9m worth of US exports, raising their tax burden by 20-30% for some beverages. The report cites industry forecasts from US companies including Coca-Cola and Pepsi.

With the change, taxes on fruit and vegetable juices also rose to between 0.06 baht and 0.54 baht (0.2c to 2c) per bottle, and on energy drinks with high sugar content to between 0.32 baht and 0.9 baht.

The tax hits tea and coffee drinkers hardest, as they were previously exempt, with the taxes increasing by about 1-2 baht per bottle.

Obesity is a common issue among Southeast Asian nations. Singapore recently requested beverage makers, including Coca-Cola, to commit to a maximum sugar content of 12% for all of their drinks sold in Singapore by 2020.

Indonesia plans to introduce legislation next year aimed at reducing the content of sugar, salt and fat in food. Malaysia ended its consumer-friendly subsidy for sugar in 2013.

Thailand's Ministry of Finance said it estimates the sugar tax will boost revenue by 2.5bn baht annually, adding to the 12bn baht generated from taxes on goods, including some alcoholic beverages and cigarettes.

Tan Passakornnatee, CEO of green tea maker Ichitan, said working class people in Thailand wanted tea-flavoured syrup, rather than unsweetened tea, due to their love of sugar.

According to the World Trade Organisation, 26% of men and 33% of women in Thailand were obese in 2014, up 7-8 percentage points from 2004, owing to more white collar jobs and less exercise, among other things.

In March, the Asian Development Bank also issued a report estimating the cost of obesity to the Thai economy at $404m, or 12bn baht, annually.

It said among these costs, 46% ($86m) come from direct health care costs for outpatient and inpatient care, while the remaining 54% ($218m) comes from indirect costs, including those associated with premature death ($195m) and absenteeism ($23m).

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