Jakarta: The Finance Ministry has proposed Rp1,500 to Rp2,500 excise tax on each liter of sugary drinks to offset the growing number of diabetes cases.
"Many countries have imposed an excise tax on harmful products, including sugary drinks," Finance Minister Sri Mulyani Indrawati said in a working meeting with Commission XI of the House of Representatives here Wednesday, February 19, 2020.
"We all know that diabetes is one disease with the highest growth, especially with the increased public income. Maybe this has contributed to the high cost for the BPJS (Insurance and Social Security) for Health," the former World Bank managing director added.
An excise tax of Rp1,500 per liter would be imposed for packed tea with production currently reaching 2,191 million liters per year. The policy is expected to reduce production to 2,015 million liters per year and there will be a potential state revenue at Rp2.7 trillion.
An excise tax of Rp2,500 per liter will be imposed on carbonated drinks with production reaching 747 million liters per year. The imposition of the excise tax is expected to reduce production to 687 million liters per year with potential state revenue of Rp1.7 trillion.
The same amount of excise tax will be imposed for other sugary drinks such as instant coffee, concentrated drinks, and energy drinks with production reaching 808 million liters per year.
"Products such as energy drinks and instant coffee in sachets with the production of 808 million liters per year. The imposition of (excise tax) of Rp2,500 per liter and elasticity of 0.8, the production is estimated to reach 743 million liters and potential state revenue to reach Rp1.85 trillion," she elaborated.
According to her, if the proposal is approved by the parliament, it would increase the state revenue by Rp6.25 trillion.
Responding to the proposal, the commission has called on the government to establish a detailed road map on the excise tax imposition. (Antara)