THURSDAY, March 28, 2024
nationthailand

Sweetening the country’s taxation

 Sweetening the country’s taxation

New taxes on sugary drinks to push price up by 20 per cent or more

Taxation on sugary beverages will soon be introduced and, within two years of implementation the tax rates will increase substantially, said Somchai Poolsavasdi, director general of the Revenue Department.
Somchai said the impost on sweetened beverages was introduced because the government wanted to discourage people from consuming too much sugar. This is in line with the Food and Drug Administration health recommendations that sugar content should not exceed 6 grams, or 6 per cent, per 100 millilitres of beverage. 
To allow businesses to plan accordingly, the effective date of the tax would be September 16.
Beverages with less than 6 per cent of sugar will be exempted from the tax, and other drinks will be taxed according to the amount of sugar they contain. The higher the sugar content, the higher the tax.
Beverages with sugar would be divided into five groups: less than 6 per cent, 610 per cent, 1014 per cent, 1418 per cent, and 18 per cent up.
Most beverages on the market have about 1014 per cent, said Somchai, who added that prices would not much be higher than they are now. 
Under the current excise tax law, artificial mineral drinks, sodas and soft drinks with added sugar are being taxed at Bt0.37 per unit or botฌtle, and those without sugar are taxed at Bt0.77 per unit or bottle. 
Under the new excise tax effective on September 16, the maximum tax rate on beverages will be 30 per cent of suggested retail price, but the applied rate would be lower. 
The department will submit suggested applied rates to the Cabinet soon, then the Cabinet will have final say what the applied rates will be, said Somchai.
He said producers and importers had been consulted about the new tax rates and the department would give them two years to develop new products to meet health guidelines set by the authorities. 
After two years, tax rates would progressively increase or double for beverages high in sugar, he said. 
Deputy Finance Minister Wisudhi Srisuphan led a meeting between senior tax officials and members of American Chamber of Commerce in Thailand on Thursday, where they discussed the impact of new tax rates.
Nutthakorn Utensute, director of the planning bureau of the Excise Department, said sugary beverages in bigger containers would also be charged higher and those who could reduce sugar level could be taxed at 2030 per cent lower.
He also referred to a recommendation over sugar intake made by World Health Organisation (WHO). 
Malika Bhumivarn, a partner of Bolliger & Company Consulting Ltd, said those in the tea and coffee businesses, such as Starbucks, were concerned about the new excise.
They argued that tax might be biased against some products, for example coffee in closed containers, cans or bottle would be taxed, but coffee in a cup would not.
Some asked why the department had not imposed taxes on cakes, icecream and other sweet products. 
Coffee and tea producers are also worried about the government plan to introduce tax on the caffeine conฌtained in coffee and tea. Tax on caffeine content would also affect energy drinks. 
Somchai, however, told The Nation that the department had not yet finalised a proposal for tax collection on caffeine.
Sources in the green tea industry said that companies were developing new products with reduced sugar content and these would be launched shortly. 
Some producers had already changed the ingredients of their products by reducing sugar content, Somchai added. 
Following the World Health Organisation’s Fiscal Policies for Diet and Prevention of Noncommunicable Disease 2015, the WHO suggested that governments worldwide impose taxes on sugar sweetened beverages to reduce consumption. It recommended that taxes raise retail prices of sugary beverages by 20 per cent or more.
The WHO also noted that Thailand’s current tax rates on beverages do not promote healthy living. The WHO said that, worldwide, about 39 per cent of adults aged 18 and up were overweight in 2014. Diabetes was directly responsible for 1.5 millions deaths in 2012 and 89 million disability adjusted life years.
The increasing number of overweight children was also alarming. In 2013, an estimated 42 million children were overweight.
WHO guidelines recommend that adults and children reduce their daily intake of free sugars to less than 10 per cent of their total energy intake. A further reduction to below 5 per cent, or roughly 25 grams (6 teaspoons) per day, would provide additional health benefits.
 

nationthailand