Govt imposes 40% sin tax on colas to discourage use

New Delhi: In an attempt to check the over usage of sweetened carbonated beverages (SCBs) such as Coca-Cola and Pepsi, the government has introduced sin taxes on the sweetened beverages due to the negative health impacts of products with high sugar content.

The sin tax was brought into force on July 1, 2017, and makes India one of the first countries in the world to implement a nationwide sin tax on sweetened carbonated beverages. Soft drinks in the country are now listed alongside more established harmful products such as tobacco.

"Waters, including mineral waters and aerated waters, containing added sugar or other sweetening matter or flavoured have been placed under the highest tax bracket in the newly introduced Goods and Services Tax (GST) regime in India, at 28 per cent. In addition, these products will attract 12 per cent "compensation cess", or sin tax, a category reserved primarily for harmful products such as tobacco," said Amit Srivastava of the India Resource Center.

"The move by the government to tax SCBs at 40 per cent is significant as SCB consumption rates are still very low in India, and such a tax has the potential to discourage consumption and prevent adverse public health impacts as a result of high sugar consumption," Srivastava added.

The proposal to sin tax SCBs was supported by an international group of public health experts last year and is also aligned with recommendations made by the World Health Organization in 2016 to tackle obesity and diabetes.

"I am very encouraged that India is taking a proactive and preventative stance at this time when diabetes is rising in much of the country. Allocating the funds from this tax to public health programs would amplify the positive impact of this program on India's health and welfare," said Sanjay Basu, Assistant Professor of Medicine at Stanford University.

The sin tax on SCBs does not include fruit juices and SCB manufacturers often project fruit juices as healthy products. However, some fruit juices contain even more added sugars than are found in sweetened carbonated beverages.