Playing politics? Public outcry but business relief as Sri Lanka cuts sugar tax levy by 40%
The country’s Finance Ministry has orderd an immediate 40% reduction in the levy on sugar, according to the official Sri Lankan government news portal news.lk.
“The decision was taken by Finance Minister Mahinda Rajapaksa after a meeting with business leaders in the industry. […] The measure could reduce soft drinks prices by 30%,” said the Sri Lankan Prime Minister’s Office via the portal.
Parliamentatian Minister Bandula Gunawardena added that the tax reduction is predicted to ‘boost production efficiency of the fruit juice manufacturing industry’, and that only soft drinks with less than 6g of sugar and sweetened fruit drinks with less than 9g of sugar would be exempted.
“The Ministry has been instructed to cut the tax to 30 cents from 50 cents per gram of sugar,” he added.
He also said that soft drink and juice manufacturers had ‘expressed their gratitude’ over the reduced taxes.
Previously, Sri Lanka had implemented a sugar tax at 50 cents for every gram of sugar in fizzy and fruit drinks.
Coca-Cola Sri Lanka told FoodNavigator-Asia that it was unable to formally comment on the sugar tax as it had not yet received any official communication on the matter, but expressed positivity about developments in the country.
“Coca-Cola has been refreshing Sri Lankans for over five decades and we remain incredibly optimistic about the future in this beautiful and dynamic country,” said a company spokesman.
“As a consumer-centric company, we will continue to evolve our portfolio in line with the changing needs of consumers, to stay relevant to their lives as well as to the country’s economic growth.”
That said, public backlash decrying the move has been increasing, saying that this will set the country back when it comes to its fight against obesity and diabetes.
One of the most fervent protesters is health lobbyist Dhanya Wijesuriya.
“This is insane. […] Excess sugar causes obesity and diabetes. […] We advocates (sic) and got this to save our future generations - guess you are only looking for votes - self interest,” he said via his Twitter.
“In 2017 we were 1 /30 - 2018 1 /45 countries [implementing the sugar tax] - we are the only country racing backwards due to ad hoc decisions to appease business community.”
The motivations behind the tax reduction have largely been described as political, and an attempt to garner votes.
Previously, the nation’s health ministry released numbers saying that 10% of the population is diabetic, and an additional 20% were at risk of developing diabetes.
Sri Lanka’s political turmoil
To understand the underlying situation, it is important to have a grasp of the constitutional crisis unfolding in the country.
In October this year, Sri Lankan President Maithripala Sirisena appointed Mahinda Rajapaksa as Prime Minister, but did this before officially dismissing the incumbent Prime Minister Ranil Wickremesinghe.
Wickremesinghe and the United National Party dismissed the appointment as illegal, and he declined to resign, which resulted in the country having two concurrent prime ministers.
The previous 50 cents per gram sugar tax was introduced by Wickremesinghe's administration last year.
Last year, Sirisena had taken a very different stance against sugar in beverages. He issued a warning to Nestle over its sugar content increase in its Milo product, and had told the Finance Minister to broaden the tax to all sweetened beverages.
As of December 3, Rajapaksa and his cabinet have been temporarily halted from functioning in their positions, under directive by the Honourable Supreme Court of Sri Lanka. It is unclear whether this has any bearing on the standing of the sugar tax adjustments.