Excise Tax Systems and Administration in Asian - Maldives

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The views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of the Asian
Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI
does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology
used may not necessarily be consistent with ADB official terms.
Maldives: Excise duties

on SSB, esp. Energy Drinks
Excise Tax Systems and Administration in Asian
Countries
By:
Ahmed Naeem- Ministry of Finance and Treasury
&
Hassan Mohamed- Health Protection Agency
OVERVIEW
 The case for increasing tax on SSBs

 New policy initiatives on selected SSBs
 Rate and administration of tax
 Impact of the tax
 Lessons learned
 Next steps
Social Protection and

safety nets
 Universal health insurance
 Single Parent Allowance
 Foster Parent Allowance
 Emergency Medical Welfare
 Elderly Allowance (65+ age)
 Disability Allowance
 Food Subsidy
 All islands have a government run healthcare facility
and a pharmacy
 Out of pocket expenditure on healthcare reduced to
18%
Increasing expenditure on
Universal Health insurance
350,000 2,000
MVR Millions
1,800
300,000
1,600
250,000 1,400
Number of persons
1,200
200,000
1,000
150,000
800
100,000 600
400
50,000
200
0 0
2011 2012 2013 2014 2015 2016 2017
No. of persons Government

Expenditure (MVR)
Unhealthy Lifestyles and

Chronic Diseases Profile
 Disease profile of Maldives has
passed the epidemiologic transition
and it now has more Non-
Communicable Diseases (NCDs)
than communicable diseases
 Increasing trend in
 Sedentary lifestyles and
unhealthy diet
 NCDs
Something to think about
Before
Now

Chronic Diseases Profile…
 Increase in sedentary lifestyle observed in Male’
(STEPS Survey 2011)
 39.1% men
 52.4% women
 Metabolic risk factors
 23.5% men are obese
 27.8% women are obese

 7% of Male’ population are hypertensive or taking
medication for high blood pressure

Chronic Diseases Profile…
 Findings from School Health Surveys (All students
of Grades 1 and 7) and GSHS
 Malnourishment (Majority of students are either
underweight or overweight)
 Most common health complain is dental problems
 other underlying factors This image cann ot cur rently b e displayed.
 Aggressive and misleading marketing of SSB

 Increasing popularity of energy drinks among
adolescents and youth
 SSBs are widely available at affordable rates
NCD Burden in Maldives

Percentage of total deaths, All Ages, Both Sexes
7%
39%
12% Cardiovascular Disease
Cancers
Chronic respiratory disease

18%
Diabetes
Other NCDs
2% Communicable/maternal,
parinatal and nutritional
10% 12%
Total Deaths 1300
conditions
Injuries
NCDs are estimated to account for 81% of all
Disease Burden (NCD Deaths)

81%
NCDs VS OTHER DISEASES
Major drivers and rationale

for the change in policy
 Increase in chronic diseases leading
to increasing healthcare expenditure
 A fiscal measure to increase
government revenue
 Advocacy by medical and public
health professionals and institutions
 Widely reported cases of sudden
deaths of youth known to consume
energy drinks regularly
 Political commitment
Changes in Government
Policy towards selected SSBs
 Non-fiscal measures:
 Prohibition of Energy Drinks in Schools from 01 January
2017 onwards, extended also to cover healthcare
facilities
 Cannot be sold or consumed within school premises
 Sponsorship and consumption is not allowed for school
events
 Advertisements cannot be placed within or at a place
where it could be seen while at school.
 Fiscal measures:
 Change from value based excise duty to volume
based excise duty in 02 March 2017, on imported SSBs
Effect of change in tax policy

on Energy & Soft Drinks
 The original bill, lobbied on behalf of the government by its
coalition partner, had proposed to increase taxes of
energy drinks and soft drinks to MVR 4.60 per litre.
However, the final amendment changed the duty of
energy drinks to MVR 33.64 per litre.
 CPI for soft drinks and energy drinks registered a 2.84% and
26.21% increase in price respectively, compared to the
month before implementation.
 Accordingly, increases in price henceforth include Red Bull
cans from MVR 20 to MVR 28, and XL Energy Drink cans
from MVR 15 to MVR 23.
 Industry reacted by labelling energy drinks as soft drinks
and introducing smaller size cans
Initial observations and

limitations
 Import duties may not be as effective for Soft
Drinks as Maldives has a manufacturer within the
country.
 Immediate observations show:
 Decline in litres of energy drinks imported in 2017
 Overall Increase in revenue from import duties for
soft and energy drinks in 2017.
 However, this decline in volume imported may
also be due to stocking up in 2016
 A regression analysis is important to study the
exact effect of change in import duty on its
demand.
Initial observations and

limitations…
 The policy does not cover a wide range of very
popular SSBs
 No curbs or restrictions on misleading advertising
including the continued association of state
linked entities with the beverages industry in
promoting SSBs
Political pressure and

reaction from the Public
 There were no negative political or
public reactions observed
 The reasons may be
 Public were expecting the change
 The change in duty rates were publicised
during budget formulation
 The change was brought about with a
much higher increase in duty rate for
cigarettes
 Public is aware of the negative
externalities associated with energy
drinks, especially through media
Lessons learned
 Policies need to be more comprehensive
to prevent industry from taking
advantage of loopholes
 Whole of government and whole of
society approach is critical
 Evidence based Advocacy and public
voice critical to ensure political
commitment
 Multi pronged and multi-level
interventions need to be considered
 A public awareness advocacy campaign
necessary prior to policy formulation and
during implementation as well
 Should cover locally produced SSBs
 Use of tax revenue on implementing
policy needs to be explored
Time & Further Studies are

needed to confirm
outcome
 Actual consumption needs to be studied to
arrive at a conclusion.
 Further non-Fiscal measures, such as public
education are important to complement
the effort
 Despite the outcome being unclear, action
needs to be taken now, to protect future
generations and curb potential increase in
health care expenditure for the future.
 It is too early to do a change in
consumption or health impact assessment
of the change in tax on SSB
THANK YOU

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Maldives: Excise duties

 The case for increasing tax on SSBs

Social Protection and

No. of persons Government

Unhealthy Lifestyles and

Something to think about

Unhealthy Lifestyles and

 27.8% women are obese

Unhealthy Lifestyles and

 Aggressive and misleading marketing of SSB

NCD Burden in Maldives

Chronic respiratory disease

Disease Burden (NCD Deaths)

Major drivers and rationale

Effect of change in tax policy

Initial observations and

Initial observations and

Political pressure and

Time & Further Studies are

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