Yi Whan-woo is a Korea Times journalist primarily covering finance. He writes in-depth articles on macroeconomy and financial markets and previously covered sports, politics, diplomacy and inter-Korean affairs, among others. Feel free to contact him at yistory@koreatimes.co.kr.
‘Sugar tax’ stirs up debate over public health, inflation
A man picks up a bag of sugar off a shelf at a supermarket in Seoul, Jan 28. Yonhap
By Yi Whan-woo
A debate over whether sugar should be subject to extra taxes or levies by the government is heating up, with some promoting it as a public health measure while others worry that it will increase food costs for the most vulnerable, according to public health experts and economists, Tuesday.
The debate began on Jan. 28, when President Lee Jae Myung took to social media to propose a new sugar tax or levy, similar to those on tobacco.
“We can curb sugar consumption and reinvest the charges collected to strengthen public health both regionally and nationwide ... What are your thoughts?” the president wrote on X, formerly Twitter.
Lee’s post echoed public health concerns over sugar and its potential effect on health, including obesity, diabetes and other metabolic diseases, with some countries taking measures to regulate its consumption.
The proposal has been viewed positively from a public health perspective, and successful levies on tobacco products have been held up as precedent.
The proposed charges resemble taxes, but the resulting revenue is earmarked specifically for public health rather than general government spending.
From an economic perspective, the proposal has raised concerns about upward pressure on prices, as sugar is used at nearly every level of the food industry. Its use spans major manufacturers, franchise restaurants, small independently-owned eateries and home-delivery services, ultimately reaching families’ dinner tables.
Charges would likely be passed on to households, many of whom are already struggling with the high cost of living.
The debate has focused interest on international approaches to taxes and levies as a way to reduce sugar intake and improve public health.
Seoul National University's public health project team noted that in 2016, the World Health Organization (WHO) urged governments to increase taxes on sugary drinks by at least 20 percent to help reduce consumption.
Several countries, including Chile, Finland, France, Fiji, Hungary and Mexico, already had taxes in place on drinks and other products with added sugar, but the practice expanded following WHO’s recommendation, with more than 110 countries, including Ireland, the Philippines, Thailand, the United Arab Emirates and the United Kingdom, implementing some kind of sugar tax.
“The list of countries suggests that the health benefits and medical cost savings resulting from reduced sugar consumption can be substantial,” the team said in a statement.
Cho Seung-yeon, chair of the Korea Association of Regional Public Hospitals, dismissed concerns about inflation and price increases.
“Companies will reduce sugar to avoid taxes rather than maintain usage and pass the cost onto consumers,” he said. “Consumers can enjoy healthier products without facing price increases, so the tax has no regressive effect.”
However, some critics disagreed, including an economics professor who highlighted failed implementation cases.
He noted that Denmark imposed taxes on soft drinks starting in the 1930s, but it was abolished in 2014 due to rising prices and cross-border shopping to neighboring countries such as Sweden and Germany.
Norway also sharply increased tax rates on sugary drinks and confectionery in 2018, but protest from the retail industry and a rise in cross-border shopping led to a tax reduction in 2020.
“The policy must be addressed after considering demand for sugar and other relevant factors, not just because other countries have implemented it,” the professor said, asking not to be named.
Shin Se-don, professor emeritus of economics at Sookmyung Women's University, remained skeptical that manufacturers would reduce sugar use to avoid the levy.
“Consumers are too accustomed to sweets and reducing sugar in products would likely result in lower sales,” he said. “The companies are therefore likely to keep sugar in their products, passing higher prices on to consumers.”