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Taxing sugar-sweetened beverages, improving health quality
The Basic Health Research in 2018 shows solid evidence that the Indonesian population has a significant tendency to consume sugary beverages at a considerable rate.
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A worker arranges sweetened drinks in a supermarket in Jakarta on Dec. 14, 2023. A survey from the Indonesian Consumers Foundation (YLKI) revealed that 58 percent of 800 respondents support the plan to impose excise tax on sweetened beverages to control their consumption and prevent diabetes prevalence among children, which increased 70 times in January 2023 compared with 2010. (Antara/Cahya Sari)
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n Dec. 18, 2023, President Joko “Jokowi” Widodo set the revenue target for excise taxes on sugar-sweetened beverages (SSBs) in 2024 at Rp 4.38 trillion (US$280 million). The target is stated in Presidential Regulation (Perpres) No. 76/2023.
The policy followed an agreement between the Finance Ministry and the Budget Committee of the House of Representatives to add sugary packaged drinks to the list of items that would be subjected to a special income tax in the state budget for 2023.
In February 2020, the ministry proposed to the House an excise tax for SSBs, which was divided into three tariff levels: Rp 1,500 per liter for sweetened beverages; Rp 2,500 per liter for carbonated drinks; and Rp 2,500 per liter for concentrates like energy drinks and coffee sachets. With an estimated total SSB production of 808 million liters per year, the estimated revenue from all layers will total Rp 6.25 trillion. The next question is whether the excise will be effective in reducing the negative effect of SSB consumption.
Indonesia is not the only country to add this fiscal instrument into policy. According to a World Bank report in 2020, 48 countries tax SSBs. France was the first to implement the policy in 2012 followed by Finland and Portugal in 2017, while Malaysia started enforcing it in 2019.
The mechanisms vary in those countries, with some applying ad-valorem tariffs, with others choosing specific tariffs.
In 2017, Saudi Arabia introduced the most extensive tax on SSBs in the world, by raising the prices of soft drinks by 50 percent and energy drinks by 100 percent. In 2019, neighboring Qatar set the excise tax at 50 percent.
South Africa introduced a 10 percent excise tax on SSBs in 2018, while Malaysia raised excise duty on SSBs from 40 to 50 cents per liter in 2023.
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