Thailand: the final phase of the sugar tax comes into effect

The Thai government has announced that the final phase of the sugar tax has been put in place to reduce consumption.

According to the Ministry of Finance, following the implementation of the final phase of the sugar tax by the Excise Department:

“Manufacturers of beverages and producers of sweetened products that do not reformulate their recipes to reduce sugar content will have to pay higher excise duties.”

According to a source in the ministry who requested anonymity, the Excise Department announced an increase in sugar tax based on sugar content, starting from phase 4, which is the final phase.

This phase took effect on April 1, after the end of phase 3 on March 31.

As a result, beverage manufacturers or producers of sweet products are expected to reformulate their recipes to reduce sugar content, failing which they will face higher excise rates.

The source stated that this tax hike is not a new tax, but is part of a gradual increase scheduled every two years, starting from 2017.

The objective is to encourage manufacturers to reduce the sugar content of their products in order to promote public health and reduce the risks of obesity, diabetes, hypertension and other diseases.

See: Imminent crisis in Thailand: rise in obesity and type 2 diabetes

Effect of the tax on sugary drinks

A Thai child with a sugary drink.

This year, for beverages containing 10 to 14 grams of sugar per liter, the excise tax increases from 3 bahts to 5 bahts.

Beverages containing 6 grams of sugar or less per liter are exempt from the tax, as in phase 3.

In phase 4, for beverages with a sugar content between 6 and 8 g per liter, the tax increases from 0.3 baht to 1 baht/liter, while for beverages with a sugar content between 8 and 10 g per liter, the tax increases from 1 baht to 3 bahts/liter.

For drinks containing between 14 and 18 g of sugar per liter, as well as those containing 18 g or more, the tax remains unchanged at 5 bahts per liter.

Beverage manufacturers have gradually adapted

Bowl filled with powdered sugar. Photo: Jmexclusives

The Excise Department has estimated that this increase in sugar tax should not lead to a significant rise in the price of sugary drinks or carbonated beverages to the point of burdening consumers.

In fact, manufacturers have gradually adapted by reducing sugar content or switching to artificial sweeteners or other sugar substitutes mixed with natural sugar, which are considered less harmful to health.

According to statistics from 2018 to 2023, manufacturers of sweetened beverages have adjusted their formulas by reducing sugar content to fall into lower tax brackets.

For example, the number of beverages containing 6g of sugar or less, which are exempt from tax, has increased from 90 products in 2018 to 4,736 products in 2023.

Similarly, the number of beverages containing 6 to 8 g of sugar, which are subject to a lower tax, increased from 758 products in 2018 to 2,900 products in 2023.

On the other hand, the number of beverages subject to a high tax, such as those with a sugar content exceeding 14 g, has dropped from 819 products in 2018 to zero currently.

Similarly, beverages containing between 10 and 14 g of sugar have decreased significantly, from 2,993 products in 2018 to 524 products in 2023.

Despite awareness efforts, a large part of the Thai population remains high sugar consumers.

Many dishes and drinks served in restaurants, bars or street stalls contain large amounts of sugar, especially those located near schools.

See also:

Thailand hit by a diabetes crisis: more than 300,000 new cases per year

Decline in sugar production in Thailand due to a severe drought

Thais are invited to reduce their sugar consumption

Thailand hopes to reduce salt and sugar consumption by 30% by 2022

Despite significant air pollution, Thai farmers ignore orders to stop burning their sugarcane

Source: Bangkok Post