The sugar tax became a hot issue when the ruling party proposed a revised bill on the National Health Promotion Act on February 26th, which included imposing charges on beverages containing sugars. Through the National Health Promotion Act, which previously was only imposed charges on cigarettes, this revised bill aims to reduce sales of sugar-containing beverages to develop alternatives. What is a sugar tax? A sugar tax is not a tax directly attached to sugar, but a punitive tax that imposes different taxes based on the sugar content in sweetened foods such as soft drinks. This is what the World Health Organization (WHO) officially recommended in 2016, to impose a sugar tax on sugar-containing drinks. In other words, the WHO recommended this to limit overall calorie intake. In fact, this was done in the background to reduce obesity rates, which have more than doubled global between 1980 and 2014. The WHO said the reason people suffer from obesity and diabetes is because they eat sugar-containing products such as soft drinks, adding, "The sugar tax could reduce the number of patients with these diseases and save many lives." Those in favor of the introduction of a sugar tax in Korea expect that it will improve public health, reduce social costs, and have a tax revenue effect. On the other hand, opponents argue that the sugar tax will be ineffective, lead to higher food prices, and that the imposition of the sugar tax will be a burden on low-income groups. Should a sugar tax be introduced in Korea? Let's take a closer look at the arguments of both the pros and cons and think about them.
A sugar tax has recently emerged as a big issue in Korea since the number of countries introducing sugar taxes has increased significantly following the official recommendation from the WHO in 2016. It was on February 26th that discussions on imposing a sugar tax in Korea rekindled in earnest. Nine members of the ruling Democratic Party of Korea and Cho Jung-hoon, a lawmaker from Transition Korea, proposed a bill to partially revise the National Health Promotion Act, which would impose charges on businesses that manufacture, import, and sell sugary drinks. Specifically, the bill will charge 28,000 won if the sugary products exceed 20 kilograms of sugar per 100 liters of beverage. As many countries have imposed a sugar tax, Korea should also introduce the sugar tax for three reasons:
First, the introduction of a sugar tax in Korea can improve the health of its people through the regulation of the nation's sugar intake. Currently, Korea has a high obesity rate. According to the National Health Insurance Service in January 2019, 36.6% of Korean adults were obese in 2018. Specifically, the obesity rate of Korean male children and adolescents in 2016 is 26%, higher than the OECD average of 25.6%, and the OECD predicted that Korea's overall obesity rate will increase from 5.5% in 2016 to about 9% in 2030. In addition, sugar intake increased from 59.6g(13.3%) in 2007, to 73.6g(15.2%) in 2016. However, increasing sugar intake and obesity rates can be dealt with by imposing a sugar tax. According to the "Trend and Implications of Sugar Tax" published by the National Assembly Research Service in February 2020, the introduction of sugar tax in Korea can improve people's eating habits such as sugar intake which can lead to obesity. In addition, imposing a sugar tax in Korea would reduce the amount of sugar in sugar drinks not only for consumers but also for producers. This can be seen from the examples of countries that introduced a sugar tax before Korea. According to the JoongAng Ilbo, the Norwegian Directorate of Health said in November 2019 that Norway's per capita sugar intake recorded 24kg in 2018, down 27% from a decade ago. In the U.K., which introduced a sugar tax in 2018, domestic beverage makers have released sugar-free drinks. According to the British government, A.G Barr, a leading British beverage maker, used artificial sweetener aspartame to reduce the sugar content of its drinks from 10.3g to 4.7g per 100ml, and large distributor Tesco also reduced the sugar content of its own products. Therefore, a sugar tax should be imposed in Korea to reduce people's sugar intake on an overall level, from manufacturing to consumption, so that people's health can be improved.
Second, a tax on sugar in Korea could lead to a decrease in social costs. South Korea has spent a lot on socioeconomic costs due to its high obesity rate. According to the National Health Insurance Service, social losses from obesity, including early death losses, medical expenses, and lower productivity costs, totaled 11.4679 trillion won in 2016. However, the introduction of a sugar tax could reduce the cost of such social losses. Yoon Ji-hyun, professor of department of food and nutrition at Seoul National University, also said at the Spring Conference hosted by the Korean Academic Society of Health on May 24th, 2019, that the introduction of a sugar tax will reduce overall medical expenses. Specifically, she noted, in the U.S., a sugar tax of about one cent per 30ml could save about $17 billion in medical expenses over the next 10 years. It was also predicted that the introduction of the sugar tax would reduce social costs overseas. According to a report released in February 2016 by Cancer Research UK and the UK Health Forum, the introduction of a 20% excise tax on sugar-sweetened beverages can save 3.7 million people from obesity by 2025, with a 5% shift in obesity prevalence. In addition, the National Health Service (NHS) predicted that the introduction of the 20% sugar tax would save about 10 million pounds in health care and social care costs. If a sugar tax is imposed in Korea, the social costs of obesity will also decrease.
Third, a tax on sugar in Korea will have a positive tax revenue effect. According to the ruling party's revised bill to the “National Health Promotion Act," the sugar tax is distinct from the taxes that the state or local governments forcibly collect from the people to use as necessary expenses. Unlike taxes that can be used by the state or local governments for various purposes, this charge is only used as a national health promotion fund established under the National Health Promotion Act. In other words, it can only be used for the purposes prescribed in Article 25 of the National Health Promotion Act, such as supporting a healthy life, national nutrition management, expanding public healthcare, and health promotion facilities and equipment. Therefore, if a sugar tax is imposed in Korea, it can be used to promote the health and welfare of Koreans by expanding tax revenues. Its system is similar to cigarette taxes. In fact, according to the Korea Economic Daily in 2017, tax revenue effect increased by 3.5276 trillion won and 5.3856 trillion won in 2015 and 2016 respectively, reaching 10.5181 trillion won and 12.376 trillion won total. The collected tax revenue is used for the health of the people under the name of the National Health Promotion Fund. In fact, it was also suggested that the costs of other countries for improving public health from tax revenues could be secured. Professor Yoon said in 2019 that tax revenues of about $13 billion will be possible in the U.S. and $12 billion in China. She added that such income can be used to improve healthy diets and health promotion systems, and to promote physical activities of the public. Therefore, if a sugar tax is essential because expanded tax revenues can contribute to improve health and welfare of Korean people.
The global community has been fighting a "war on sugar" regarding the introduction of a sugar tax since the WHO officially recommended it in 2016. Unlike the increasing number of countries that impose a sugar tax worldwide, discussions on the introduction of a sugar tax came later in Korea than in other countries. In fact, countries such as Norway and the U.K., which introduced a sugar tax, have already had positive results. In Korea, it is desirable to introduce a sugar tax because it will have the effect of improving public health, reducing social costs, and tax revenue. It is now time to impose a sugar tax in Korea to encourage people to improve their eating habits at the national level, along with reducing diseases such as obesity and diabetes, which is one of WHO’s aims.