Beverage manufacturers and producers of sweetened products that fail to reformulate their recipes to reduce sugar content face higher excise taxes under the final phase of the sugar tax now in effect, says the Ministry of Finance.
The final increase in the tax based on sugar content took effect on April 1, according to the Excise Department. It was the fourth of a series of progressive increases made every two years since 2017.
As a result, beverage manufacturers or producers of sweetened products must reformulate their recipes or face higher costs.
The goal of the tax is to encourage manufacturers to reduce the sugar content in their products to promote public health and reduce risks of obesity, diabetes, hypertension and other illnesses.
This year, for beverages containing 10-14 grammes of sugar per litre, the excise tax increases from 3 baht to 5 baht. Drinks with 6 grammes or less of sugar per litre are exempt, the same as in Phase 3.
Under Phase 4, for drinks with sugar content between 6 and 8 grammes per litre, the tax rises from 0.3 baht to 1 baht/litre. For sugar content between 8 and 10 grammes per litre, the rate rises from 1 baht to 3 baht/litre.
For beverages containing sugar content between 14 and 18 grammes per litre, as well as those with 18 grammes or more, the tax remains unchanged at 5 baht per litre.
The Excise Department believes the final round of sugar tax increases is unlikely to significantly raise the prices of sweetened beverages or soft drinks to the point of burdening consumers.
This is because manufacturers have gradually adapted by reducing sugar content or switching to artificial sweeteners or other sugar substitutes mixed with natural sugar, which are considered less harmful to health.
According to statistics from 2018 to 2023, sweetened beverage manufacturers adjusted their formulas by reducing sugar to fall into lower tax brackets.
For instance, the number of beverages containing 6g of sugar or less, which are exempt from the tax, increased from 90 products in 2018 to 4,736 in 2023.
Similarly, the number of beverages with 6-8g of sugar, which are subject to a lower tax, rose from 758 in 2018 to 2,900 products in 2023.
In contrast, the number of high-tax beverages, such as those with sugar content exceeding 14g, declined from 819 products in 2018 to none currently.
Likewise, beverages with 10-14g of sugar dropped significantly from 2,993 products in 2018 to 524 in 2023.