SINGAPORE — The Ministry of Health (MOH) is proposing to impose a new sugar tax on the soft drinks industry, in a bid to lower the risks of diabetes and obesity among the population here.

The proposal is intended to encourage manufacturers to reformulate their products and encourage consumers to choose healthier drinks that are lower in sugar, or to simply drink plain water.

In the wake of the ministry’s announcements on Tuesday (Dec 4), drinks makers here are already bracing themselves for this move to be finalised, even as a public consultation on the measure is ongoing till Jan 25 next year. Coca-Cola Singapore, for instance, told TODAY that it will “continue to rethink” many of their recipes to reduce sugar.

Pokka Corporation Singapore said that it was “supportive” of the Government’s “health agenda” and “looks forward to seeing the consultation document”.

WHAT COULD BE TAXED?

• Proposed measures include a nationwide ban on the sale of higher-sugar, pre-packaged beverages, as well as a tax on manufacturers and importers of these beverages.

• Higher-sugar drinks are defined as those containing an average of 5.5 teaspoons of sugar per 250ml, and include energy drinks and soft drinks.

• The proposed tax is aimed at ready-to-drink beverages that come in a bottle, can or packet. Some examples would be full-sugar Coca-Cola and Pepsi.

• The proposed measure does not cover drinks that are made on the spot at coffee shops or other drinks shops, such as coffee, tea or bubble tea, where the sugar level may be determined by customers.

WILL PRICES FOR TAXED DRINKS GO UP?

• The proposed levy is intended to apply to manufacturers, but it is up to them whether they will pass on the cost to consumers.

• Some experts — such as Professor Teo Yik Ying, dean of the Saw Swee Hock School of Public Health in the National University of Singapore (NUS) — said that consumers bearing the higher costs is unlikely, because beverage products are highly price-elastic. So if the manufacturers decide to raise prices, they will likely see a significant drop in demand.

• Prof Teo expects manufacturers to reformulate their products to bring down sugar levels, to avoid or reduce the amount of taxes.

• Health Promotion Board’s chief executive officer Zee Yoong Kang said that there “may well be some passing on (of cost) to consumers”, but he hopes that “the increase in price (could) also serve to encourage consumers” to choose other drinks with less sugar.

HOW MUCH COULD THE TAX BE?

• There are no details at the moment on the tax amount. However, countries which already have similar taxes go with tiered tax rates.

• In the United Kingdom, which adopted a sugar tax this April, drinks with more than 8g of sugar per 100ml see a tax rate equivalent to £0.24 (S$0.44) a litre. Those containing 5g to 8g of sugar per 100ml are taxed £0.18 a litre.

• In Thailand, tax rates are lower, but they will increase every two years until 2023. By then, drinks with 6g to 8g per 100ml will be taxed 1 baht (S$0.04) a litre, while those with 8g to 10g of sugar per 100ml will be taxed 3 baht a litre. For drinks with 10g to 14g of sugar per 100ml or drinks with 14g or more sugar per 100ml, they will be taxed 5 baht a litre.

• Prof Teo said that a tiered model is much likely to “create pressure” for manufacturers to reformulate their drinks so that they can be in the lower tax bands.

WHY NOT DESSERTS?

• Products such as chocolate bars, cakes, cereals and sugary desserts such as ice kacang and chendol (which come with syrup and shaved ice) are not covered by the proposed tax.

• Prof Teo said that this is because desserts are seen as an addition to a meal. “Dessert is the last course of a meal, whereas drinks are often deemed to accompany a meal without one realising the caloric content of these drinks.”

• Drinks are targeted also because sugar-sweetened beverages are the highest and most significant source of sugar intake among Singaporeans.

• A national nutrition survey done this year by the Health Promotion Board found that more than half of Singaporeans’ daily sugar intake comes from sugar-sweetened beverages, and these are usually in the form of pre-packaged drinks in can or packet form.

• Sugar in beverages has been dubbed as “empty calories”. Professor Eric Andrew Finkelstein from the health services and systems research programme at Duke-NUS Medical School said that they have “little to no health benefits”.

•  “There is some evidence that beverage calories are more obesity-promoting than solid calories. A narrower tax (on sugar drinks) is politically viable as there is less argument that it harms the poor. That said, other products (such as chocolates) are also obesity-promoting and could be fair targets for a tax,” Prof Finkelstein said.

WILL TAX SUCCEED IN LOWERING SUGAR INTAKE?

• Similar measures have been fairly successful in several countries. In Hungary, 40 per cent of manufacturers reformulated their products and there was a 20 to 35 per cent reduction in consumption of high-sugar beverages and salted snacks, after its government applied a wide-ranging tax on a range of products including beverages, jams and snacks.

• In the UK, more than half of manufacturers reformulated their products. The maker of the Scottish drink Irn Bru, for example, stopped making its original full-sugar version, even before the proposed tax was passed in the UK.

• Dr Chia Shi Lu, chairman of the Government Parliamentary Committee for Health, said that “one of the best effects” of having a public consultation is that it will “pre-empt manufacturers” to reformulate their drinks. “During the whole to-and-fro (of discussions), the manufacturers in the UK brought their sugar content down,” he said, hoping this will be the case here as well.

HOW MUCH TAX REVENUE WILL IT GENERATE?

• MOH said that the taxes are “not for revenue generation, but to shape the behaviour of manufacturers and consumers”.

• Dr Chia does not expect the tax revenue from the proposed measure to be high. “The theory behind such a tax is not to make (beverages) unaffordable, but to encourage and make people think twice when buying a high-sugar sweetened drink.”

• In the UK, its new sugar tax on soft drinks has raised £153.8 million (S$268.9 million) since it was introduced this April, its government said last month.

• Prof Teo suggested that if the tax were to be passed here, the tax revenue could go into subsidising healthier food options so that the prices of these products will go down and “become a lot more accessible to the general public”.