IDS Ukraine, one of the largest producers of bottled water and beverages in Ukraine, advocates for differentiated excise rates on sugary and carbonated water in bill No. 9032-1, which introduces an excise tax on drinks with added sugar, sweeteners, and flavorings.

"The common practice of collecting such an excise in most countries is to target the funds towards healthcare, often more specifically towards measures to prevent and combat diseases related to glucose metabolism disorders, such as diabetes. In Ukraine, this tax is currently seen as a fiscal tool for additional budget revenues (estimated by the Ministry of Finance at up to UAH 8 billion annually), which is quite relevant given the need to finance defense," Vadym Vychka, a member of the board of directors and legal advisor to IDS Ukraine, told Interfax-Ukraine.

He said that the introduction of such an excise tax in Ukraine could be just the first step towards its further development.

According to Vychka, many countries encourage producers to reduce the sugar content in their drinks and consumers to switch to products with lower sugar content through differentiated excise rates based on the sugar content. In contrast, Ukraine is starting its excise policy in this area by considering a simple flat rate of EUR 0.1 per liter of sugary and carbonated drinks.

"We believe that setting differentiated excise rates based on the sugar content in drinks is a fairer approach, which can act as a limiting factor for the consumption of excessively sugary drinks. This approach encourages producers to modify their recipes to reduce sugar content and/or switch to less harmful substitutes," said Vychka.

He also predicted that the introduction of the excise tax on sugary and carbonated drinks in Ukraine would impact consumer prices, as the very nature of excise duty is a "consumption tax," meaning producers of excisable goods incorporate the excise amount into the final product price.

On July 17, the parliamentary finance committee recommended the Verkhovna Rada adopt bill No. 9032-1, which proposes amending the Tax Code of Ukraine to include drinks, including mineral and carbonated, with added sugar or other sweeteners, as well as flavorings as excisable goods, and to establish a specific tax rate of EUR 0.1 per liter. According to an explanatory note to the document, the taxpayers will be importers and producers.