Put sugar tax expansion on hold till economy improves, economists, retailers urge
MINDERJEET KAUR06 Sep 2022 09:00am
Women shop for flour and sugar at a supermarket in Kuala Lumpur. - Philip Chong / AFP pic
SHAH ALAM - Economists have asked Putrajaya to delay implementing the sugar tax expansion list till the country's economy improves, while milk retailers fear parents may look for cheaper milk products to cut costs.
Sunway University Professor of Economics Yeah Kim Leng said the country is facing inflationary pressure and should put the sugar tax expansion list on hold.
"The lower income families will be severely hit as prices of essential products rise.
"It is an essential item and (the government) should ensure prices do not increase during this high inflationary period," he told Sinar Daily.
Due to that, there is merit to postpone the tax for the next two years or once the country's economy improves.
This announcement comes after health minister Khairy Jamaluddin said that infant formula would not be included in the sugar tax expansion list.
It was also noted in the ongoing 12th Malaysia Plan that the sugar tax would be expanded which may include premix drinks such as powder milk.
The sugar tax came into effect on July 1, 2019, whereby an excise tax of 40sen per litre was levied on sugar-sweetened beverages with a total sugar content exceeding 5gm/100ml.
Prof Barjoyai Bardai of Universiti Tun Abdul Razak urged the government to create awareness on the impact of consuming drinks and food with high sugar before expanding the tax list.
"The MPs could debate sugar tax in Parliament to create some sort of public awareness and implement it later when the economy improves," he told Sinar Daily.
He said prices of milk and bakery products might rise even though it will be minimal but it will add to people's monthly expenditure.
"The question is the timing as people are still grappling with the cost of living," he said.
Barjoyai also urged the government to substitute sugar with other alternatives to educate people toward a healthier lifestyle.
Parents may opt for cheaper milk
Retailer, Emma Mohd from Very Important Baby World said parents have complained about the cost of living after milk suppliers hiked milk prices by at least RM5 recently.
"They are often complaining about the prices of baby milk products.
"If it increases further, some parents may opt for cheaper milk with lower nutritional value," she said, adding that other milk retailers were also facing the same complaints from parents.
Due to that, she said it is best to hold on to the tax for at least a year or two till parents can cope after experiencing a sluggish economy for the past two years.
Another milk retailer who wanted to be known as Lim said suppliers had increased milk prices by RM5 to RM8.
"When they increase the prices, we have to hike the prices too. People are the ones who have to pay more," he said, adding that suppliers have been hiking the prices of goods due to inflation and the cost is being passed down to consumers.
