SHAH ALAM - The government's plan to increase the excise duty for sugary drinks to 50 sen per litre is a good move, academician Professor Geoffrey Williams said.
He referred to Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim's Budget 2024 speech yesterday which announced plans to increase the excise duty from 40 sen per litre and with such tax collected to be channelled to treat diabetes and provide support to dialysis centres.
"The main purpose of increasing the excise duty rate for sugary drinks is to reduce sugar consumption due to its negative health effects," he told Sinar Daily.
He went on to provide a succinct definition of the 2024 budget's excise duty rate for sugary drinks, characterising it as a tax on sugar in beverages, including carbonated sodas.
"So, it is a health tax like taxes on cigarettes. However, sugar is more addictive than nicotine and more widely used.
"When you increase the price of sugar products, the demand does not fall significantly.
"This means that even with an increased tax, consumers may continue to purchase sugary drinks. The government can generate substantial revenue without causing harm to sugar suppliers," Williams drew parallels with taxes on cigarettes.
When asked who would bear the additional expenses resulting from the tax hike, Williams said, "Almost all the cost will most likely be borne by consumers.”
"Historically, when a 40 sen tax was introduced, demand hardly decreased, and most consumers simply absorbed the additional cost.
"If the tax rises by 10 sen, increasing it to 50 sen per litre, it may go unnoticed by consumers, but it could generate an additional RM180-200 million in tax revenue for the government," he added.
It's worth noting that the government initially introduced a 40 sen excise charge on sweetened beverages in July 2019.