In a concerted effort to promote healthier eating habits, a recent study commissioned by NITI Aayog recommended the introduction of a health tax ranging from 20% to 30% on food items high in sugar, salt, and fat. The proposed tax is set to encompass sugar-sweetened beverages (SSBs), including popular choices like colas and juices.
UNICEF-funded public health researchers conducted the study with the objective of influencing policies to mitigate the consumption of sugar and related products.
This initiative aligns with NITI Aayog's overarching goal of evaluating the impact of health taxes and warning labels on food products to encourage healthier choices among Indian consumers.
The Ministry of Consumer Affairs, Food, and Public Distribution disclosed a significant statistic, citing, "Confectionery manufacturers purchase up to 55% of the annual sugar produced in India." Presently, researchers are employing the "price elasticity" method to assess potential reductions in demand if prices rise. Analysis of datasets spanning from 1984-85 to 2011-12 reveals that a 10% increase in sugar prices leads to a mere 2% reduction in demand, holding other factors revolving demand to remain constant.
Beena Varghese, a health economist and WHO consultant, emphasized, "For confectionery manufacturers buying sugar in bulk, we estimate higher price elasticity. By imposing an additional 30% tax on top of the existing 18% GST, we anticipate a 13%-18% decrease in demand for sugar."
On the global stage, approximately 70 countries, including Mexico, Chile, Saudi Arabia, South Africa, and Argentina, have implemented health taxes targeting sugar, SSBs, and HFSS. Comparatively, global sugar consumption stands at 22kg per person per year, while the average Indian consumes 25kg per year, comprising regular sugar, free sugar from sweetened beverages, and traditional sources like jaggery—almost five times the WHO-recommended threshold for free sugar intake.
Experts suggest that implementing this proposed health tax could act as a deterrent while simultaneously generating revenue for initiatives focused on advancing better nutrition and well-being.
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