Taxing Sugary Drinks for a Healthier Kazakhstan
The consumption of sugary drinks in Kazakhstan has seen a significant increase in recent years, with per capita sales of sugar sweetened beverages rising by 50% between 2018 and 2023. This surge in consumption is largely attributed to the growing intake of these drinks by young people, with half of school-aged children in Kazakhstan consuming sugary drinks on a weekly basis. However, higher sugar intake has been linked to a range of health issues including type 2 diabetes, obesity, tooth decay, stroke risk, and various types of cancer.
This concerning trend has resulted in nearly a quarter of children in Kazakhstan being overweight or obese, presenting a pressing public health challenge. In response to these health concerns, 121 countries globally have implemented taxes on sugary sweet beverages, with 106 countries having national-level taxes in place. These taxes aim to encourage consumers to make healthier choices while generating revenues for important development priorities.
Although there may be initial concerns about the impact of such taxes on businesses, evidence from other countries suggests that these concerns are often exaggerated. Manufacturers of sugar-sweetened beverages also offer alternatives such as water and diet drinks, allowing consumers to shift towards healthier options without major disruptions to the economy.
In light of these developments, Kazakhstan is considering applying a tax on sugar-sweetened beverages to address the rising consumption of these drinks. The proposed tax would start at 100 tenge per liter (US$ 0.21) and gradually increase to 180 tenge per liter (US$ 0.38) over two years, accounting for an average of 22% of the price of sugary drinks. The World Bank has evaluated this proposal and found it to align with established best practices for a well-designed tax on sugary drinks.
The modeling conducted by the World Bank suggests that the proposed tax could lead to a 16% reduction in the sales of sugary drinks, while increasing the purchase of bottled water by 41%. Overall, the impact on the sales of all non-alcoholic beverages is expected to be minimal, limiting any potential negative effects on the economy.
Furthermore, the tax is projected to increase government revenues by approximately 0.25% of GDP by the third year, similar to the amount collected from tobacco taxes in 2021. This proposal builds on Kazakhstan’s previous success in using taxation as a tool to improve health outcomes, as seen in the significant reduction in deaths from tobacco-related illnesses following a 352% increase in cigarette excise taxes between 2012 and 2022.
As Kazakhstan prepares for the revision of its Tax Code, there is an opportunity to implement the tax on sugary drinks and reconsider tobacco and alcohol taxes to enhance public health outcomes and raise essential revenues for public spending. The World Bank’s Global Tax Program and Health Taxes Project stand ready to support countries like Kazakhstan in designing effective taxes that promote better health outcomes while ensuring fiscal sustainability.
The authors, experts from the World Bank – Ceren Ozer, Evan Blecher, and Natasha Sharma, emphasize the importance of implementing smart taxation policies to address the growing issue of sugary drink consumption in Kazakhstan and improve overall public health outcomes.
