Why taxing sugar, not soda, makes more sense

Why taxing sugar, not soda, makes more sense

By Hafidz Baharom

While the government continues to talk about a need to introduce new taxes in Malaysia, it seems too keen to just implement a soda tax rather than do an all round sugar tax instead. Why?

Well, perhaps they are more keen to tax the likes of Pepsi and Coke, rather than Nestle. Or perhaps it is the fact that they just want an easy out rather than focus on the objective of wanting to cut caloric consumption of Malaysians to combat diabetes.

The latter of course makes no sense unless you speak Malay. The framing of how sodas cause diabetes is because sodas are sweet and the Malay term for diabetes is “kencing manis”, which literally translates to “sweet urine”.

Thus, it is easy for the government to simply frame soda as the cause of diabetes, rather than go through an expansive and thorough explanation of how it is the amount of calories consumed and stocked up inside each individual body that makes someone obese and subsequently puts them at risk of diabetes.

That said, sodas are not even the Top 3 top consumed drinks in Malaysia. A survey seen on Statista puts the top three drinks in Malaysia drunk regularly in 2016 as coffee (60.83 percent), tea (60.12 percent), and juice (54.18 percent).

In fact, more Malaysian respondents drank bottled water compared to soda – a fact that perhaps any anti-plastic minister would like to look into rather than just look at soda companies as the culprit.

So if this government wants to truly look at a way to combat diabetes, it needs to start doing two things – first, it is to look at ending this tax on sodas, and instead looking at taxing all foods and beverages by sugar content.

It would also mean taxing sugar and all similar products (high fructose corn syrup) sold to consumers and businesses. That, by itself will mean taxing everyone from Pepsi to Coke to Nestle, all the way down to the goreng pisang seller at the side of the road and the mamak mixing the teas and coffees.

Can this be done? Sure it can.

All you have to do is tax it at its source – the government would tax Pepsi, Coke, Nestle and F&N for the amount of sugar or fructose syrup they use in their products during the manufacturing process. The tax would also apply to the sweet soy sauce, the tinned curries and pastes, and even the sugar sold on the shelf directly to consumers.

At the same time, the producers and importers of sweeteners such as the gula Melaka syrup, mixed honey (those clearly with sugar added) and even juices, flavoured milks and even condensed milk, will be taxed with a measure of sugar content per 100 millilitres (ml).

Because let us be real, most Malaysians drink more sugar in their teh tarik and Nescafé at the mamak rather than a bottle of Coke. The survey points it out clearly.

So, what’s the challenge of introducing a sugar tax rather than a soda tax?

Here’s the problem – how will these importers and producers drill down the tax to consumers, and how would consumers react?

And here’s the question – why the heck would the government care, if it believes on taxing sugar will lead to healthier people?

Or perhaps, the goal is not healthier Malaysians, and just scapegoating sodas to make revenue for itself to pare down the national debt?

This is the dirty truth about the government – it wants to remain popular, and wants to make a quick buck without pissing off too many people. In doing so, it would rather introduce a soda tax, accusing sodas as the cause of diabetes (it’s not) and then saying that this tax would help reduce such cases (it won’t).

And this is where it gets icky. The government is set to introduce new taxes whether we like it or not.

The soda tax has been talked about a lot in the last week, with the Ministry of Health holding a session with 12 various NGOs and experts from the medical sector, with only 2 representatives from the industry for a round table.

Gee, I wonder how that went down.

Renowned economist Joseph Stiglitz has said that the government should introduce a carbon tax instead, which is pretty much hopeless considering the government still insists on a third national car project while also wanting to protect the petrol and energy sector to keep tariffs low.

Plus, adding a sugar tax after reintroducing the Sales and Services Tax (SST) which was supposed to make life easier for Malaysians, would definitely impact more goods, restaurants and produce than the Goods and Services Tax (GST) that was abolished, probably even impacting the upcoming Ramadan Bazaars and cookie freelancers during Hari Raya even worse.

So perhaps the government can do one of two things – either end this selling of a fallacious notion that they are “taxing people for health benefits”, or really introduce proper taxation for health benefits.

Either way, Malaysians can look forward to being taxed for a beverage that has minimal impact if you drink the non-sugar alternatives such as aspartame and stevia, while juices, soy milk and even coffee, tea, and Milo which is full of sugar, continue to be sold at market prices and contribute to the same “diabetes” label the government sold to the masses.

PS:

Also, keep an eye out for capital gains taxation, because this will impact your EPF, your KWAP, your unit trusts, and even your ASB. Good luck, Malaysia.

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