Sugar drinks: New tax, higher prices & social engineering

New sugar tax to cut future health costs, high sugar consumption means 2.2% lost GDP each year from obesity, diabetes & heart disease.

TAXES, PUBLIC HEALTH & SOCIAL ENGINEERING

Sugar drinks: New tax, higher prices & social engineering

16/06/2017
Wichit Chantanusornsiri and Darana Chudasri

For soft drink consumers this week there is both good news and bad news.

The bad news is a new tax on sugar drinks that will make soft drinks more expensive to buy.

The good news is that if you buy a drink with less sugar, then you will pay less tax.

NEW SUGAR TAX AIMED AT REDUCING THAILAND'S FUTURE HEALTH COSTS

"The new tax is intended to cut future health costs for Thailand, both from imported pharmaceuticals and medical services," said Prachuab Tayakeepisut, vice- chairman of the Thai Beverage Industry Association.

According to a Food and Drug Administration (FDA) survey, high sugar consumption results in 198.5 billion baht in losses or 2.2% of the country's GDP each year, mainly from obesity, diabetes and coronary artery disease.

FINANCE MINISTRY WANTS TO ENCOURAGE HEALTHIER DRINKS

The Finance Ministry is set to trim the excise tax for reduced sugar drinks in an attempt to encourage people to consume healthier products and prompt makers to reduce sugar content, says a source at the Finance Ministry.

Drinks that contain less sugar than the Finance Ministry's threshold will be levied a lower excise tax than that for drinks with higher sugar content, the source said.

The tax on sweet drinks is part of the amended excise tax act set to come into force from Sept 16.

SAVE ONE BAHT BY DRINKING LESS SUGAR

Under the amended tax, the levy on drinks with sugar content that has been reduced to the level required by the Finance Ministry will be cut to four baht per bottle from five.

The source said drinks for which 10% of the content is fruit or vegetable juice with sugar content lower than the Finance Ministry's threshold will be exempted from the tax.

But the ministry will impose an excise tax if the drink's sugar volume exceeds the set mark.

At present, the Excise Department exempts drinks with at least 10% fruit and vegetable content.

20-25% TAX FOR CARBONATED DRINKS WITHOUT FRUIT OR VEGETABLES

Artificial mineral water, carbonated drinks and beverages with fruit or vegetable content lower than the 10% requirement are taxed in a range of 20-25%.



ELIMINATING LOOPHOLES THAT ALLOW TAX UNDERPAYMENT

The new excise tax law entails a tax base computation to recommend retail prices.

These calculated prices will replace ex-factory prices and cost, insurance and freight value.

These later prices must be replaced because they have tax loopholes that let manufacturers understate tax payments.

HARDEST HIT: FRUIT & VEGGIE JUICES WITH NATURAL INGREDIENTS

The hardest-hit drinks are likely to be fruit and vegetable juices with natural ingredients, whose market value is 30 billion baht a year, said Mr. Prachuab.

"Fruit and vegetable juices with natural ingredients have been included in Thailand's excise taxation for a long time, but they are tax-exempt," he said.

"Those products will be taxed once the new sugar tax comes into force."

SECOND HARDEST HIT: CARBONATED & ENERGY DRINKS

The second hardest hit will be dealt to carbonated and energy drinks, with market value of 50-55 billion baht and 30 billion, respectively.

But Mr Prachuab said the new sugar tax will eventually be passed on to consumers.

Nutthakorn Utensute, director of the Tax Planning Bureau of the Excise Department, said the government is not focused on getting more tax revenue from the new sugar tax.


http://www.bangkokpost.com/news/general/1269275/slim-tax-for-healthy-drinks-on-tap

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Writer: Jon Fernquest
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