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10 Jan 2022

Econ Digest

Thai government plans to implement salt tax based on consumer health concerns…A challenge to business operators


        The Excise Department is in the process of setting guidelines for imposing a salt tax to reduce the sodium consumption of Thai people. The guidelines are set to be announced in 2022, so that business operators can improve their production before implementation. On average, a Thai person consumes 3,636mg of sodium daily, which is almost twice the World Health Organisation (WHO)’s recommended amount. This may be one of the causes of many chronic non-communicable diseases, and incur total medical expenses of no less than THB100 billion per year or accounting for nearly a quarter of the country’s total health expenditure.

        KResearch projects that the market value of products classified as containing high sodium content (as measured by the sodium content per package of products randomly sampled in the market) will be around THB88,000 million in 2022, accounting for 18% of the total market value of ready-to-eat and semi-finished foods. While the criteria that the authority will use to determine tax rates should be continuously monitored, the product groups expected to be affected when the salt tax is imposed in the future are instant noodles, frozen foods, instant porridge, ready meals, canned fish and snacks. This will occur under the influence of rising production costs such as energy costs and palm oil prices, as well as transportation restrictions, in contrary to purchasing power taking time to recover and the cost of living accelerating due to inflation.

         Besides the salt tax issue, other challenges that ready-to-eat and semi-finished food manufacturers have to adapt to at an accelerated pace include surging costs amid high cost of living, as well as the changes in consumer behavior surrounding attention to health and environment. Therefore, implementation of such a tax shall be carried out with consideration towards the appropriate timing and adjustment period for producers to adjust recipes or use low sodium salt substitutes. This action must be carried out in parallel with the change in consumer behavior in choosing foods based on nutritional principles and the propagating of risk of disease caused by excessive sodium intake.

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Econ Digest