"Consumers prefer a sugar levy to be imposed as a "levy" for a specific purpose rather than as a general tax. Public trust and consensus that the secured funds will be used for proper purposes, such as promoting adolescent health or education to prevent obesity, are prerequisites for the policy's success."
Park Seong-jin, head of the Food and Horticultural Economy Research Office at the Korea Rural Economic Institute (KREI), said the same at the "Sugary drinks sugar levy policy forum" held at the aT Center in Seocho-gu, Seoul, on the 7th, saying, "If a sugar levy is imposed, it will have a significant impact on the food and beverage industry." Park added, "It could also lead to a contraction in employment and investment."
The forum was co-hosted by the Korea Rural Economic Institute (KREI) and the Korea Institute of Public Finance(KIPF). On Jan. 1, President Lee Jae-myung wrote on his social media (SNS) account, "Like tobacco, curb sugar use with a sugar levy and reinvest the levy to strengthen local and public health care. What do you think?" As related discussions gained momentum, the forum was held on the day.
Experts said, "The policy should not focus on securing tax revenue," and added, "It should induce corporations to lower sugar content on their own."
They cited the United Kingdom's "industry levy" approach as the most successful model. Park Eun-chul, a professor at the Institute of Health Policy and Management at Yonsei University, explained, "The U.K. divides tiers based on 5g and 8g of sugar per 100 mL and imposes different rates," adding, "This approach gives corporations a strong signal that 'if you cut sugar, you don't have to pay the tax.'"
Park then proposed introducing a sugar levy with three tiers based on sugar content. The plan centers on a three-tier specific tax structure based on sugar content. It would impose 225 won per liter for products with 5g to less than 8g of sugar per 100 mL, and 300 won per liter for 8g or more. Products with less than 5g are excluded from taxation. Under the plan, a 250 mL can containing 27g of sugars would carry about 75 won, and a 500 mL PET bottle about 150 won.
Park emphasized, "In the U.K., during the grace period before implementation, most manufacturers lowered sugar content below the threshold to avoid the tax," adding, "From the government's standpoint, tax revenue would decrease, but in terms of the policy goal of reducing people's sugar intake, it is the most complete success."
A strategic analysis also followed on which stage to impose the levy for the greatest effect. Choi Seong-eun, head of the Fiscal Outlook Center at the Korea Institute of Public Finance(KIPF), who presented the report, said, "A specific tax (proportional to quantity) at the manufacturing and shipment stages is more effective than an ad valorem tax (proportional to price) at the retail stage," adding, "If the levy is imposed at the manufacturing stage, corporations feel direct cost pressure and will try to reduce sugar content from the product design stage."
Choi added, "If imposing it at the distribution stage risks simply resulting in higher prices, imposing it at the manufacturing stage becomes a driver that leads to voluntary product innovation by corporations."
There was also pushback against the claim that a sugar levy would increase the financial burden on low-income groups. Park said, "Leaving risk factors to health unaddressed out of concern for the financial burden on low-income groups goes against health justice," adding, "As with tobacco, the health improvement benefits and medical cost savings that low-income groups gain by reducing sugar consumption are far greater than the tax burden."
However, debate over the introduction continues. In a consumer survey conducted by Park, 38.3% supported introducing a sugar levy and 40.0% opposed it, splitting opinion. Concern that imposing the levy would trigger a "balloon effect," shifting consumption to other sugary foods, reached 68.8%.