Kuala Lumpur, 5 November 2018 – The government’s decision to impose an excise duty on sugar sweetened beverages at RM0.40 per litre for non-alcoholic, fruit and vegetable beverages is an innovative move to address the ongoing obesity crisis. It is long overdue and should have been implemented much earlier by the previous administration. The Galen Centre for Health and Social Policy welcomes this decision to reduce sugar consumption as a means of encouraging health living, but sounds caution on expectations.

Commenting on this development, Chief Executive Azrul Mohd Khalib said, “The effectiveness of this tax in actually reducing obesity is mixed. Studies from the United Kingdom, Chile and Mexico which have implemented this measure have shown that in the short term, young consumers (between 13-30 years) who are price-sensitive will very likely reduce their sugar consumption by up to 80 percent. Older individuals and those who already have high-sugar diets for decades are unlikely to change habits and are 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.”

“As previously recommended, to increase its effectiveness, the tax should be applied to manufacturers and not at the point of retail, which is similar to how it is currently being done in the UK. This will incentivise manufacturers to reduce the sugar content in their products to avoid being taxed. The truth is that we cannot depend on Malaysian consumers to change and adopt healthy choices and habits.”

“Malaysian consumers have a diverse selection of food and beverages to choose from. The beverages being taxed are but a small proportion of food and drink which are of poor nutrition and high in fat, sugar and salt. Consumers will switch or increase preference to familiar alternatives such as sirap bandung, milo, teh tarik, kopi susu and three layered tea. 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.”

“The sugar tax revenue collected should be earmarked and could go towards the funding of health programmes designed to deal with non-communicable diseases (NCDs), specifically 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.”

 

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