New sugar tax on confectioneries

A new sugar tax is just around the corner, and this time it will target sweets and confectionery in addition to a fizzy levy on sugary beverages.

Despite the assurance given by President Maithripala Sirisena to the Sri Lanka Confectionery Manufacturers' Association (SLCMA), this tax based on sugar content is likely to be introduced from the upcoming budget 2019, Health Ministry sources confirmed.

The move could affect 50,000 direct and 150,000 indirect employees in the confectionery industry, the SLCMA said.

Leading confectioners will have to increase the price of their products for its sustenance to compete with low cost imported sweets and it will eventually drain much needed foreign exchange, a spokesman of the Association pointed out.

The present import levies on confectionery fats and other ingredients are already exerting an impact on the industry, he said, adding that it has hit companies exporting sweets to over 55 countries overseas.

Health Minister Dr. Rajitha Senaratne has made a proposal to the Finance Ministry to increase the sugar tax which was reduced during the recent 52 day-government.

This tax was introduced last year with the aim of minimising sugar consumption to prevent non communicable diseases, he has disclosed.

With Sri Lanka reaching one of Asia’s highest per capita consumption level of confectionery items which is close to 4kg per person, sugar reduction has become the health trend under the spotlight of the government.

In the earlier proposal, the Budget 2018 had estimated Rs. 5 billion from the imposition of the “Sugar Tax” in Sri Lanka to the state coffers.

Fruit drinks, juices and nectar produces were feeling the brunt of the sugar tax which came into effect from July 25, 2018, an official from a producing company said adding that they were relieved by the recent reduction of tax during the 52-day period.