In the Era of Sugar Taxes Across 116 Countries, Korea's Key Lies in Tailored Design
With levies on sugary drinks now in force in at least 116 countries as of July 2024, according to the World Health Organization (WHO), a diagnosis emerged on the 7th that the success or failure of the policy in Korea will hinge not on whether to adopt one, but on designing it to fit Korean conditions. The point was made at a tax policy seminar held that day at the Federation of Korean Industries building in Yeouido, jointly hosted by the Korean Tax Policy Association and the Korea Taxpayers' Federation. Experts in attendance agreed that rather than transplanting overseas models wholesale, the scope and criteria of taxation should reflect domestic consumption patterns, the spread of low- and zero-sugar products, and the way Korean food companies develop their products.
The variables flagged by the experts were not few. They argued for a comprehensive review covering everything from whether alternative sweeteners should fall within the tax base, to equity relative to other high-sugar foods such as snacks, chocolate and bread, the degree to which the levy is actually passed through to prices, the burden across income brackets, and the effect on companies' product reformulation.
Overseas tax designs differ from country to country. WHO data show that while some countries tax only carbonated soft drinks, others have widened the net to include juices, energy drinks, and sweetened teas and coffees. Some apply differential tax rates based on sugar content, and a few even bring beverages containing artificial sweeteners into the tax base.
The United Kingdom, which introduced its Soft Drinks Industry Levy (SDIL) in 2018, is often cited as a leading example of using tiered levies—charged at different rates depending on a drink's sugar content—to steer companies toward lower-sugar products, inducing them to cut sugar to avoid the charge. Nam Hye-jung, a professor at Dongguk University, said, "The U.K. sugar levy did not stop at simply curbing consumption; it prompted companies to reformulate their products," adding, "When evaluating the effects of introducing such a levy, changes in consumption should be weighed alongside structural shifts in the market, such as companies' moves toward lower sugar."
Mexico, Thailand and other countries saw consumption change after taxation. But the experts in attendance noted that how far those declines translated into ultimate health gains—less obesity or fewer chronic diseases—must be assessed separately. They argued that effectiveness should not be judged solely on consumption drops driven by price increases; actual health indicators and consumers' substitution choices should be analyzed as well.
Denmark offers a case of repeal. It operated a tax on sweetened beverages, cut the rate in 2013 and then abolished it altogether in 2014. Behind the repeal were cross-border shopping—with consumption drifting to neighbors such as Germany and Sweden—burdens on domestic businesses, and administrative costs.
Defining the tax base is another variable. The experts noted that taxing beverages alone could raise fairness concerns relative to other high-sugar foods such as snacks, chocolate, bread and ice cream. Conversely, broadening the coverage to a wide range of foods would enlarge administrative costs and industry burdens, making it all the more important to decide which foods to include and under what criteria.
Price pass-through was also raised as an issue. The experts observed that even if the statutory levy level is the same, the price effect consumers actually feel and the burden across income brackets can differ if companies absorb part of the cost or if markup sizes vary at the distribution stage. Noh Jung-ran, a professor at Myongji University, emphasized, "The policy goal of promoting health is important in itself, but whether price regulation actually leads to health improvements requires separate verification. Policy tools should be chosen after a comprehensive evaluation covering not only reduced consumption but also shifts toward alternative sweeteners or other high-sugar foods, the burden on different income groups, and companies' reformulation toward lower sugar."
