Sugar tax welcome, but Malaysians will choose teh tarik, says think tank

KUALA LUMPUR, Nov 5 ― A health think tank praised today a tax on soft drinks, but warned the government that consumers could switch to sweet beverages like “teh tarik” that did not fall under the sugar tax.

The Galen Centre for Health and Social Policy said the non-alcoholic fruit and vegetable beverages that would be taxed 40 sen per litre starting next April were only a small proportion of unhealthy food and drink.

“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,” Galen chief executive Azrul Mohd Khalib said in a statement.

He said the excise duty on sugar-sweetened beverages was long overdue, but cautioned the government that studies have shown mixed effectiveness of the tax in reducing obesity.

“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 per cent.

“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,” he said.

Galen also urged the government to apply the sugar tax to manufacturers instead of at the point of retail, like in the United Kingdom, to incentivise manufacturers to reduce sugar content to avoid the tax.

“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,” Azrul added.

Finance Minister Lim Guan Eng announced last Friday during the tabling of Budget 2019 that a 40 sen tax per litre will be imposed on soft drinks with more than five grams of sugar or sugar-based sweetener per 100ml, starting April 1 next year.

This includes carbonated drinks, or flavoured and other non-alcoholic beverages. For juice or vegetable-based drinks, a 40 sen tax per litre will be imposed on drinks with over 12g of sugar per 100ml.