Context: The International Diabetics Federations India Diabetes Report 2000-2045 called India the “diabetes capital of the world’ comprising  17% of the global diabetic population. 

Sugar Tax Advocacy: Combating Diabetes and Promoting Healthier Lifestyles

• The World Health Organization (WHO) recommends reducing the intake of free sugars to less than 10% of one’s total energy intake.
• Prominent Reasons for Higher Incidence: Higher intake of sugar as part of daily diets and its high content in products like sugar-sweetened beverages (SSBs).
  • It Includes products like carbonated or non-carbonated soft drinks, fruit or vegetable juices and drinks, liquid and powder concentrates, flavored water, energy and sports drinks, ready-to-drink tea, ready-to-drink coffee and flavored milk-based drinks.
• Sugar Levy/Tax:  A tax on sugar can make sugar-rich products costlier, reducing their consumption and encouraging companies to cut the sugar content in their products.

What is Sugar Tax/ Levy?

A sugar tax (also called Soda tax) is a surcharge on sugar-sweetened beverages (SSBs) and sometimes other sweetened snacks.

Global Strategies: Sugar Tax on Beverages for Health and Revenue

A study conducted on analyzing the tax regimes of 122 countries based on World Bank information highlighted,

• SSB taxation has slabs based on both the sugar content and volume of beverages. 
• Distinctions are made between beverages with,
  • high sugar( carbonated and energy drinks) content
  • low sugar( low-calorie sweetened beverages,sweetened milk-based drinks, concentrates)content 
  • no sugar( pure fruit juices and unflavoured milk) content
• Benefits: It leads to  Increased tax revenues, better health outcomes, faster product reformulations and enlarged export opportunities.

India’s Tax Dilemma: Challenges and Impact on Sugar Beverages

There is a  GST regime in place but it has systemic issues with  the country  yet to levy a layered sugar tax on SSBs.

• Inverted duty structure: Tax on bottled water( 18%) v/s tax on  juice with high sugar  at 12% and a high-sugar milk-based drink at only 5%.
  • It results in making water pricier than a sugar based drink, making it out of reach for the larger population.
  • Gives an impression that  health is not a consideration when it comes to determining taxation policies.
  • Led to growth of a large counterfeit market, which does not pay tax.
• All carbonated beverages:  face a steep 40% tax irrespective of their sugar content. High taxation will disincentivize entry of startups in the industry and stall new product innovations and halt exports growth as well.

Urgent Call for Sugar Tax: Balancing Health and Beverage Industry

• Beverages industry:
  • Investment is low as it faces one of the highest GST rates globally.
  • India ranked 15th last year in terms of revenue generated from the beverages sector, In spite of being one of  the top producers of milk, fruits and vegetables,
• Health considerations: India faces a double whammy of, undernutrition and malnutrition, resulting in India lagging behind SDG 3 ( Good Health and Well Being)
  • An  Indian Council of Medical Research (ICMR) study  on diabetes found that ,an estimated 101 million people in India were diabetic, while an estimated 136 million were pre-diabetic in 2021.

News source: livemint