The United Arab Emirates (UAE) has imposed a 50% tax on soda and 100% tax on energy drinks. The tax came into effect on 1st October 2017.
UAE’s high diabetes rates are a constant worry and it is estimated that about 19.3% of the UAE population (nearly one in five people) between the ages of 20 and 79 have type 2 diabetes. The country now aims to lower obesity and diabetes rates in the country through this soda and energy drinks tax.
The tax has been dubbed as “sin” tax, as most of the taxed items such as tobacco, caffeine, and sugar are often pleasurable, unhealthy, and addictive.
This is not the first time soda tax is imposed by a government. In the past, cities like Philadelphia, Pennsylvania in the USA have imposed a 1.5 cent-per-ounce soda tax but found that it garnered little revenue and did not contribute to many immediate positive health effects.
A 2017 Asian Development Bank study found that a 20% tax on sugar-sweetened beverages was associated with a 3% reduction in overweight and obesity prevalence in China, with the greatest effect on young men in rural areas.
While the impact of soda tax on health and obesity levels are yet to be ascertained, there are concerns over its impact on sales of energy drinks and sodas in UAE. UAE is a huge market for sugar producers, fructose and glucose makers as well as starch companies. How will this tax impact raw materials sales to end users such as energy drink makers and soda companies? Will the tax really impact sales of these beverages?
Britain and Thailand and several other cities in the US are keeping a close watch on the UAE soda tax experiment to decide whether it is worth implementing or not in their countries and cities.
CMT’s 3rd Starch World Dubai on 18-19 September, 2018 in Dubai will assess the implications of these taxes.
For more information about the event, contact Ms. Huiyan Fu at
huiyan@cmtsp.com.sg or call +65 6346 9113.
