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Jakarta Post

Industry Ministry to analyze impact of new taxes on sweetened drinks

  • News Desk

    The Jakarta Post

Jakarta   /   Mon, February 24, 2020   /   02:40 pm
Industry Ministry to analyze impact of new taxes on sweetened drinks Britain joined France, Norway and Mexico on April 6, 2018 in rolling out a sugar tax on soft drinks in an attempt to tackle obesity and tooth decay in children. (AFP/Paul Ellis)

The Industry Ministry plans to analyze the impact of the imposition of new taxes on sweetened beverages, proposed by the Finance Ministry, on the beverage industry in Indonesia. 

The ministry’s acting director of beverages, tobacco and refreshments, Supriadi, said on Friday that it needed to have a quantitative impact analysis, which was currently being carried out by associations and industry players. 

“What is certain, qualitatively, is that the rise in taxes will lead to a decline in demand as prices rise,” Supriadi said, as quoted by Antara news agency. 

He added that production was projected to be lower, which would impact the growth of the beverage industry. However, the degree of its impact could only be understood after the calculations were made. 

Referring to the proposed policy from the Finance Ministry, packaged sweetened tea will see an excise fee levied of Rp 1,500 (11 US cents), meanwhile carbonated beverages, energy drinks, concentrated coffee and similar beverages will see a levy of Rp 2,500. 

The excise is lower for packaged tea because the amount of sugar within these beverages is lower than other sweetened beverages, according to survey results. 

Read also: Indonesia revives excise plan on plastics, dirty vehicles and sweet drinks

Finance Minister Sri Mulyani Indrawati explained that the rise in obesity and sugar-related diseases made it necessary for the excise fees on sweetened beverages to be imposed. 

“We know that there are several diseases caused by overconsumption of sugar, for example, diabetes mellitus, obesity and others. The prevalence of diabetes mellitus and obesity rose almost twofold in the span of 11 years,” the finance minister said during a hearing with House of Representatives Commission XI in Jakarta on Feb. 19, as quoted by kompas.com

She added that the new taxes could raise revenue of up to Rp 6.25 trillion. 

However, the policy does not apply to products that are made and packaged outside of non-manufacturing factories, exported goods or for honey products and vegetable juices without added sugar, Sri Mulyani said. 

If imposed, Indonesia will not be the first country to enforce a special tax on sweetened beverages. 

Read also: Opposition mounts on Vietnam's plan to impose tax on sweet drinks

According to a Vietnam News report, the Vietnamese Finance Ministry proposed a 10 percent special consumption tax on sweetened drinks for similar health reasons in 2018. 

Meanwhile, other countries in Southeast Asia already have a head start. Nonalcoholic carbonated soft drinks are subject to a 20 to 25 percent tax rate in Thailand. Soft drinks in Laos and Cambodia are taxed at a 5 to 10 percent and 10 percent tax, respectively. 

Singapore has gone a step further by banning advertisements for drinks with high sugar content as part of the country’s “war on diabetes”, the first country in the world to do so. (ydp)