A health tax of between 20% to 30% in addition to GST may be thought of to be imposed on sugar, sugar sweetened drinks (SSBs) like colas and juices in addition to meals high in sugar, salt and fats (HFSS), public health researchers have beneficial in a study printed in Journal of Health Policy and Planning.
The advice is an end result of a UNICEF-funded mission, and the authors hope that this study together with others will affect insurance policies aimed to cut back consumption of sugar and associated merchandise. Niti Aayog is in understanding the impression of imposing health taxes and warning labels on food merchandise for encouraging wholesome consuming practices in Indian shoppers.
Dr Beena Varghese, health economist and advisor, WHO and a co-author of the study tells The Hindu that the study doesn’t suggest taxing households on buy of their common ration of sugar. “The study insists that bulk consumers of sugar such as confectionery and sweet manufacturers may be taxed which may reduce their demand for sugar. When the higher costs are transferred to consumers, demand for such products is expected to reduce,” Dr Varghese says.
For the aim of the study, sugar is outlined as all types of refined and unrefined sugar and gur (brown cane sugar), sugar utilized by bulk producers for all unbranded and unlabelled sweets and confectionaries.
According to Ministry of Consumer Affairs, Food and Public Distribution information, confectionery producers buy as much as 55% of annual sugar produced in India. “We estimate that manufacturers may be more sensitive to prices of sugar than a household that purchases smaller quantities as a part of their essential food basket,” Dr Varghese says.
Currently sugar is taxed at 18% GST, if a further 20-30% tax is imposed, it will take the tax to 38-48%. Researchers have utilized the metric of ‘Price Elasticity’ to find out if there might be any discount in demand if costs of the product went up. “Sugar is a widely used product, so on studying price and demand for sugar over years from datasets available between 1984-85 to 2011-2012 of Private Final Consumption Expenditure and Consumer Price Index, we estimate that if the price of sugar is increased by 10%, demand for sugar will be reduced by 2% with all other factors driving the demand remaining constant.
“However, for manufacturers of sweets and confectionaries, who buy sugar in bulk we are estimating a higher price elasticity, so by imposing an additional 30% tax to 18% GST, we estimate that there could be a 13-18% decrease in demand for sugar,” Dr Varghese says.
For sugar sweetened drinks, a health tax of 10-30% may end result in 7-30% decline in demand, whereas 10-30% health tax for HFSS merchandise would end result in 5-24% decline in demand.
Researchers additionally famous that extra taxes would improve tax revenues for the federal government by 12-200% throughout completely different situations. Different merchandise are at the moment taxed otherwise. While sugar at the moment attracts 18% GST, sugar sweetened drinks entice 28% GST and a 12% extra cess, whereas high fats, salt and sugar merchandise solely entice 12% GST.
“Taxing unhealthy foods more is likely to reduce demand, while increasing government revenues for reinvestment back into public health programmes and policies that may reduce obesity and the incidence of non-communicable diseases in India,” says Dr Varghese.
India is the biggest shopper of sugar in the world, the paper notes. “Global average consumption of sugar is 22 kg per person per year, an average Indian consumes 25 kg per year which includes regular sugar, free sugar from sugar sweetened beverages, traditional sources like jaggery, which is five times the WHO recommended threshold for free sugar intake,” the paper says. India is going through a sugar epidemic with an increase in sale of aerated drinks by 22.5% and an increase in all smooth drinks by 24.8% from 2016 to 2019. Also, HFSS food merchandise account for 10-30% of common complete caloric consumption in rural and concrete households respectively, the paper notes.
Imposing health tax on sugar and associated merchandise will help management weight problems, tooth decay, danger of kind 2 diabetes, heart problems and sure cancers. Researchers say that if individuals proceed to devour sugar sweetened drinks year-on-year the obese and weight problems prevalence is anticipated to rise from 39% to 49% from 2014 to 2023 and sort 2 diabetes incidence is anticipated to rise from 319 to 336 per 1,00,000 in the identical interval.
Tax charge is tied to the quantity of sugars and producers are inspired to reformulate and scale back the quantity of sugar in drinks. “We have recommended taxing artificial sweeteners and other sugar replacements in the similar vein so that manufacturers do not look for cheaper alternatives,” she says.
Up to 70 international locations have imposed a health tax on sugar, SSBs and HFSS together with Mexico, Chile, Saudi Arabia, Argentina and South Africa. In Mexico, taxation on SSBs decreased consumption of taxed drinks (and elevated buy of bottled water) in the primary 12 months of implementation and diminished imply BMI in youthful age teams.
