Jakarta. A consumer protection association recently proposed sugary drink excise as a sweet alternative to the controversial value-added tax (VAT) hike, citing that such measures could prevent children from getting diabetes.

In less than a month, Indonesia will raise the VAT from the current 11 percent to 12 percent to generate more state revenue. The government is facing mounting calls to postpone or cancel the VAT hike, and also to explore other options to make money.

The Indonesian Consumers Foundation (YLKI) urges the government to slap an excise on sugary drinks instead, saying that making sweetened beverages more expensive would do wonders for children’s health and the national economy. Indonesia would also need a healthier young population if it really wants to be a high-income country by its centenary in 2045.

“So why don’t we impose excise on sugary beverages so our children do not have diabetes,” YLKI’s executive Indah Sukmaningsih told a forum held by B-Universe Media Holdings at the latter’s headquarters in Pantai Indah Kapuk 2.

“Sugary drinks excise can be an alternative [to the 12-percent VAT]? … Many Indonesians have been diabetic since a young age,” Indah said.

In September, the House of Representatives proposed a 2.5 percent excise on sugary drinks starting in 2025, which would gradually increase to 20 percent over time. 

Think-tank Center for Indonesia's Strategic Development Initiatives (Cisdi) reported that a 20-percent excise on sugary drinks had its economic boons. An excise of at least 20 percent could help Indonesia save Rp 40.6 trillion ($2.5 billion). About Rp 24.9 trillion of the saved spending comes from getting rid of the need for diabetes treatment. Indonesia could also save Rp 15.7 trillion by preventing economic losses from the disease-induced lost productivity.

As many as 1,645 children across the archipelago are diabetic as of 2023, according to the Indonesian Pediatric Society (IDAI). Data also shows 2 out of 100,000 Indonesian children have diabetes. Indonesia collected Rp 221.8 trillion in excise throughout 2023. Excise revenue had reached Rp 174.4 trillion so far this year as of October.