Sin tax won’t cut sugar intake

| Updated on November 10, 2020 Published on November 10, 2020

In matters of health, fear works better than taxes

India, the world’s second-largest producer of sugar, exported a record 5.65 million tonnes in 2019-20 with the help of subsidies, which are opposed by Australia, Brazil and Guatemala on the ground that such subsidies go against the World Trade Organization (WTO) norms and the spirit of free trade.

Consumption in India has stagnated at 19 kg per capita a year compared with the global average of 23 kg. This is because social media campaigns project the cane-based sweetener as unhealthy and discourage people from eating it, according to the Indian Sugar Mills Association (ISMA) which takes up cudgels on behalf of the domestic producers to safeguard the interests of the mill owners.

While exporting is an option, the truth is sugar is in disfavour world over with the health conscious youth, which is sold on the medical opinion that sugar is devoid of any nutritional value and that glucose that energises human body is amply provided by wheat, rice and other staples eaten by us that have other nutritional value.

Thus, an international consensus seems to be building against sugar intake much to the detriment of producers.

Sales pitch

In the event, ISMA’s sales pitch — sugar is the most preferred source of the body’s fuel for brain power, muscle energy and every natural process that goes into proper functioning of our body cells — seems to be counter-intuitive. The awakening against sugar is not only in the social media but also agitating the minds of lawmakers.

The UK, alarmed by the growing incidence of childhood obesity, toyed with the idea of a sugar tax but gave it up in the sober realisation that while a sin tax on tobacco and liquor can be justified, such a levy on sugar may become unimplementable what with sugar being an essential ingredient on a whole variety of restaurant and confectionery preparations. Soft-drinks and ice-cream, too, use a generous quantity of sugar.

In other words, a sugar tax would become inflationary as it would bring within its sweep a whole range of food items. Furthermore, the artificial sweetener industry that has been thriving would get a leg-up.

There is a school of thought amongst the medical fraternity that artificial sweeteners, while avoiding sugar and thus sparing one from connected issues such as obesity, brings with it its own side-effect — damaging the kidneys, for instance. A sugar tax thus might have the unintended effect of driving people into the arms of an equally dubious substitute.

Diabetic capital

India has the dubious distinction of being the diabetic capital of the world. While ISMA has an interest in promoting the consumption of sugar, the writing seems to be on the wall for manufacturers and sugarcane growers. Cigarette manufacturers earlier seemed to ignore a similar writing on the wall but were jolted out of complacency by the growing body of evidence that established a one-to-one relationship between oral and lung cancer and tobacco consumption.

In matters of health, therefore, fear is a sterner disciplinarian than taxes. But finance ministers cannot be faulted for putting a huge shovel into the sin goods with the fig leaf of public health winning them adherents, admirers and supporters. States in India tax liquor ostensibly to discourage its consumption but really to fill their depleting coffers.

Farmers, too, will have to read the writing on the wall. Sooner or later they may have to change their cropping pattern. Black soil one understands is as much conducive to sugarcane production as for cotton.

Wisdom lies in slowly switching from sugarcane to cotton. By making this switch, India can overcome the cotton shortage it has been experiencing for some time now.

This is just an example. Soil experts and agro-economists must be having other ideas too.

The writer is a Chennai-based

chartered accountant

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Published on November 10, 2020
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