South Korea Contemplates Taxing Beverages with Sugar Substitutes
South Korea's ongoing debate over a sugar tax now includes a proposal to tax beverages with sugar substitutes. Two bills in the National Assembly propose levies on drinks containing sugars and sugar substitutes. Advocates argue that these measures could help reduce chronic diseases and healthcare expenses, while critics say that such taxation could be an overreach of regulatory powers.
The initial suggestion came from President Lee Jae Myung, who in January expressed interest in a sugar levy akin to the existing tobacco tax. The idea is to use the revenues to improve regional and public healthcare systems. Currently, in South Korea, taxes and levies make up a significant portion of the tobacco retail price, approximately 73.8% of the cost of a pack of cigarettes.
Democratic Party (DP) Rep. Kim Yoon, a former medical school professor, is drafting a bill that would subject sugar substitutes to the levy, similarly to added sugars. The proposed levy would be 250 won per liter for drinks with 5 to 10 grams of added sugar per 100 milliliters, and 500 won per liter for those with more than 10 grams. A 350-milliliter can of cola containing 37 grams of sugar would see an additional 175 won under this plan.
Other representatives, including Kim Sun-min of the Rebuilding Korea Party and Lee Soo-jin of the DP, have submitted their own proposals with different levy rates. An additional levy of up to 50 won per liter on beverages sweetened with substitutes is also under consideration. Revenue from these taxes would fund research into low-sugar products and facilitate manufacturers' shifts towards lower-sugar production.
There is concern regarding the regressive nature of the levy, as lower-income consumers generally consume more sugary drinks and thus could be disproportionately affected. Analysis suggests that lower-income groups might bear the majority of the cost increase. Despite the decrease in sugar consumption in recent years, with average daily intake falling from 67.9 grams in 2016 to 59.8 grams in 2023, the proposal continues to face scrutiny.
Internationally, 116 countries had taxes on sugar-sweetened beverages in the previous year, with 85 of them applying to drinks containing sugar substitutes. Countries like Britain saw a significant reduction in the sugar content of taxed beverages, while others like Thailand experienced smaller consumer behavior shifts despite price hikes.
Government officials express caution due to potential inflationary impacts and increased burdens on both businesses and the population. Before any decisions, they emphasize the need for comprehensive public discussion.
