Think it through before raising taxes again

Think it through before raising taxes again

A more broad-based strategy rather than just a levy on sugary drinks is essential to curb the incidence of non-communicable diseases in Malaysia.

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The tax on sugary drinks has led to a decline in the consumption of sweet beverages but has failed to curb the rise in non-communicable diseases. (Rawpixel pic)
PETALING JAYA:
At times, thinking things through is essential to ensure the right decisions are made.

This is especially so when decisions on new policies or changes in existing ones have a deep impact on the people.

One that is at the centre of much debate now is the impending increase in the tax on sugary drinks next year.

Granted the intentions — to stem the rising prevalence of non-communicable diseases (NCDs) — are good.

Malaysia is facing a health crisis and NCDs, the leading cause of death among Malaysians now, are at record highs.

However, steps that have been taken so far to deal with the problem have come up short.

The tax, introduced in 2019 on beverages with more than 5gm of sugar per 100 millilitres and fruit or vegetable-based drinks with more than 12gm of sugar per 100 millilitres, did lead to a discernible drop in the consumption of these beverages.

When the tax rate was raised from 40 sen to 50 sen this year, the consumption of sugary drinks declined by a further 9.25%, according to health minister Dzulkefly Ahmad.

However, it has failed to stem, much less reverse, the NCD tide.

Experts say raising the tax rate to 90 sen next year is inadequate and short-sighted given the extent of the health problem.

The crisis on our hands

Reports and surveys carried out by various authorities paint a grim picture of the state of Malaysians’ well-being.

According to the 2023 National Health and Morbidity Survey (NHMS), the prevalence of diabetes among adults rose from 13.4% in 2015 to 15.6% last year.

More than 54% of Malaysians have a weight problem, with 32.6% of them overweight and another 21.8% obese.

Abdominal obesity, which is a major cause of heart diseases, now affects 54.5% of the population.

Apart from that, 15.6% of Malaysian adults now live with diabetes and 29.2% have hypertension.

How we got here

Malaysia has the unenviable title of “Fattest Nation in Asia”. According to Unicef, the country also has the second highest rate of childhood obesity in Asean.

The problem starts at an early age. According to the Unicef Malaysia Annual Report 2023, one in three children aged five to 17 is overweight or obese, mostly the result of consuming unhealthy food and leading a sedentary lifestyle.

The NHMS of 2023 also shows that 95.1% of Malaysians fail to meet the recommended daily intake levels of fruits and vegetables while 29.9% of them are physically inactive at most times.

Economic disparity, cultural habits and easy access to unhealthy food only make things worse, according to Unicef.

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Ultra-processed foods raise the risk of obesity, leaving the consumer more vulnerable to non-communicable diseases such as hypertension. (Envato Elements pic)

Processed foods and drinks are especially potent. To make matters worse, as Consumers’ Association of Penang president Mohideen Abdul Kader pointed out, these unhealthy fares are now the main items on the average Malaysian menu, thereby driving up obesity and other NCDs.

“Ultra-processed foods are laden with hidden fats, sugars and salts. Salty snacks, ready-to-eat meals and sugar laden desserts now dominate supermarket shelves,” he said.

Long hours sitting in front of the screen at work and on the couch at home add to the problem.

The underlying concern

While the tax on sugary beverages has reduced the consumption of sweet drinks, it has failed to keep Malaysians off unhealthy food.

As Mohideen pointed out, the levy may have been a necessary start, but it has failed to address the broader dietary challenge.

Lifestyle changes have led to an increase in the consumption of ultra-processed food such as salty snacks and instant noodles as well as ready-to-eat meals.

Processed foods, which contain high levels of saturated fats, salt and sugar, are often marketed as affordable and convenient. On the other hand, they also lack nutritional value.

For the record, saturated fats lead to a build-up of cholesterol in the blood vessels while a high level of salt intake causes hypertension that leads to heart disease.

With the focus on levying taxes only on sugary drinks, cheap snacks and food remain the most popular items on the menu, and the NCD epidemic goes unabated.

Financial impact

In a Dec 13, 2023 opinion piece, the Khazanah Research Institute dismissed the argument that higher prices of sugar-sweetened beverages will be an economic burden.

It pointed out that such beverages are not a necessary component of any diet.

In fact, failing to curb the increasing consumption of sugar can be even more costly.

The KRI report stated that in 2017 alone, the cost of treating diabetes, cardiovascular diseases and cancer patients amounted to RM9.65 billion.

Almost half (45.4%) of that sum was spent on treating people with diabetes.

NCDs are also a direct cause of absenteeism and reduced workforce efficiency and these factors have led to annual productivity losses of about RM16 billion.

The need for a more comprehensive plan rather than just a tax on sugary drinks has never been more urgent.

Lessons from other nations

A more broad-based plan of action is essential to prevent Malaysia from getting to the brink, and in this respect, there are valuable lessons that can be learned from other countries’ experiences.

In 2014, Mexico introduced a tax on non-essential energy-dense foods such as salty snacks, chips, cakes, pastries and frozen desserts — basically food that contain high levels of hidden fats, sugar and salt.

Studies show that the tax led to a 5.1% drop in the purchase of these food items especially among the lower-income households, according to PLOS Medicine, a peer review medical journal.

In 2011, Hungary introduced a tax on products with high contents of sugar, salt and caffeine such as confectioneries, soft drinks and salty snacks.

This led 70% of manufacturers to reduce the quantity of these harmful ingredients in their products and the remaining 30% to remove such ingredients altogether.

As a result, the consumption of food containing harmful ingredients dropped, according to a June 20, 2019 paper by the Hungarian ministry of human capacities, state secretariat for health and national institute of pharmacy and nutrition.

Similar results were achieved in Chile after the introduction of the comprehensive food labelling and advertising regulations.

What needs to be done

There is a better way to deal with the rising incidence of NCDs, and raising the tax on sugary drinks yet again is certainly not it.

Taxes, if inevitable, have to be more broad-based. Apart from sugar, saturated fats and salts are just as unhealthy and extending the levy on foods and drinks that contain these substances is a good place to start.

Make it mandatory for manufacturers to inform consumers of the quantity of hidden fats, sugar and salt that are present in the food items that they buy.

The information should be displayed prominently on the front side of the packet.

There has to be some restrictions on the extent manufacturers are allowed to go in advertising foods that contain hidden fats, sugar and salt. This is especially crucial if those advertisements are targeted at children.

Use proceeds from the tax on food items containing hidden fats, sugar and salt to defray the cost of healthier options and to pay for public health campaigns.

Last but not least, these efforts should be aligned with education reforms, urban planning and public healthcare strategies.

It is not impossible to get people to change their lifestyle to improve their well-being.

Putting a little thought into it will make life a lot sweeter too.

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