Ruling party and government push 'sugar levy' to avoid tax backlash, raising inflation concerns

[Financial News] President Lee Jae-myung has personally put forward the idea of a sugar levy, and the Democratic Party of Korea has now begun to bring the issue into public debate. While many countries impose such measures in the form of taxes, the ruling party and the government are considering a levy structure instead, in order to avoid a public backlash against new taxes.
Jung Tae-ho, a Democratic Party lawmaker who serves as secretary of the National Assembly Planning and Finance Committee, hosted a "Parliamentary Forum on a Sugar Overuse Levy" at the National Assembly Library of the Republic of Korea the same day. It was the second such forum following one held last year, and it drew attention because it came after President Lee publicly proposed the idea via social media (SNS).
Jung said, "People say Korea has become a republic of diabetes. If we include high‐risk groups, the number of people with diabetes reaches 23 million. The social cost has already surpassed that of smoking," stressing the need to impose a levy.
He pointed out that one of the key issues is whether to impose a levy on excessive sugar use or to introduce a tax. However, the party and the government are leaning toward a levy rather than a tax.
Moon Jung-bok, a senior member of the Democratic Party, said at the forum, "We discussed this issue even before the presidential election as a way to secure more funding for education. It is similar to allocating part of the tobacco consumption tax to education taxes." She went on, "But once the proposal moved to the Office of the President of South Korea, it was altered. If we call it a sugar tax, there is likely to be strong tax resistance and the plan may not pass, so the idea is to structure it as a levy and use part of the revenue to promote public health."
Government officials at the forum also referred to it as a levy. Lee Hyeong-hoon, Second Vice Minister of the Ministry of Health and Welfare, expressed agreement with the need for such a levy in his congratulatory remarks, saying, "Introducing a new levy will place a burden on both the public and industry, so a broad public discussion is necessary."
Two bills to introduce a sugar levy are currently pending in the National Assembly. They would impose a levy on manufacturers, processors, and importers of sugar‐sweetened beverages. The bills were introduced by Lee Soo-jin of the Democratic Party of Korea and Kim Sun-min of the Rebuilding Korea Party, both members of the Health and Welfare Committee of the National Assembly.
A major concern is that a sugar levy could add upward pressure on food prices. Jung Ji-yeon, secretary-general of the Korea Consumer Federation, warned during the discussion, "If it leads to higher prices for drinks and snacks, people may see it not as a health policy but as a price policy."
Business groups also questioned its effectiveness. They argued that, as a quasi-tax, the levy would still face public resistance, and that companies are already expanding low‐sugar and alternative sweetener products. Lee Sang-uk, a director at the Korea Food Industry Association (KFIA), noted, "For ordinary people, it does not feel any different from a tax, which is why the effectiveness of sugar taxes continues to be debated overseas."

uknow@fnnews.com Kim Yoon-ho Reporter