Jakarta. The State Finance Accountability Committee (BAKN) of the House of Representatives (DPR) has proposed an excise on sugar-sweetened beverages (SSBs) at 2.5 percent starting in 2025, with a gradual increase to a maximum of 20 percent.

Wahyu Sanjaya, head of BAKN, said that the excise aims to control and reduce the negative impacts of high sugary drink consumption. The introduction of the tax is expected to boost state revenue from excise duties and reduce reliance on tobacco excise taxes.

"BAKN recommends that the government implement a 2.5 percent excise on packaged sugary drinks in 2025, with a progressive increase up to 20 percent," Wahyu said during a working meeting at the House of Representatives on Tuesday.

The 2025 State Budget Draft (RAPBN) outlines that the excise on sugary drinks aims to curb excessive sugar and sweetener consumption and encourage the industry to reformulate products with lower sugar content. This initiative is expected to reduce negative health impacts, including a decrease in non-communicable diseases (NCDs).

Gov’t Told to Involve Businesses in Sugary Drinks Excise Policymaking

Askolani, Director General of Customs and Excise at the Ministry of Finance, noted that the implementation of the sugary drink excise will depend on the economic conditions in 2025. He emphasized that the tax rate will be determined by the next administration, but stakeholder input will be considered during policy implementation.

"It will depend on the government next year. All aspects will be considered, so this is just a recommendation," Askolani said.

Earlier this year, President Joko “Jokowi” Widodo signed the implementing regulation for the 2023 Health Law. This government regulation, known locally as PP 28/2024, includes plans for capping sugar levels in food and beverages and introducing excise taxes on sugary drinks.

Yusuf Rendy Manilet, a researcher at the Center of Reform on Economics (CORE) Indonesia, emphasized the need for the sugary drinks excise due to the negative externalities associated with artificial sweeteners. He stressed that the tax should be viewed not only as a revenue-raising tool but also as a measure to mitigate the health risks of excessive sugary drink consumption.

"While the SSB tax is seen as a revenue-generating tool, it is crucial to consider its role in reducing the health risks associated with excessive consumption of artificially sweetened beverages," Yusuf noted.

Will Sugary Drinks Tax Keep Indonesians Away From Diabetes?

According to the Indonesian Employers Association (Apindo), the food and beverage industry accounted for 39 percent of the non-oil and gas industry’s gross domestic product (GDP) in 2023. Its share in the national GDP stood at 6.55 percent that year.

The government aims to collect around Rp 244 trillion ($15.6 billion) in combined excise from tobacco products, beverages containing ethyl alcohol, ethanol, and packaged sweetened beverages in 2025.

Think tank Cisdi estimates suggest that the excise could help Indonesia save Rp 40.6 trillion by increasing the prices of sugary drinks by at least 20 percent. These savings are attributed to reducing the need for diabetes treatment and preventing economic losses from disease-induced lost productivity.

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