Gaps in Sri Lanka’s sugar-sweetened beverage (SSB) taxation and traffic-light labelling (TLL) are limiting the policies’ full potential, a study by the Institute of Policy Studies (IPS) has found.
The research, by Priyanka Jayawardena, Nisha Arunatilake and Usha Perera, found strong evidence that demand for sugary drinks is price-responsive. A price-sensitivity analysis of carbonated soft drinks, using Household Income and Expenditure Survey data, showed that a 10% increase in prices led to about a 15% decline in the quantity demanded — confirming that taxation can curb consumption.
A discrete choice experiment on the labelling scheme found that roughly two-thirds of consumers are aware of traffic-light labels, with higher awareness among younger, more educated and higher-income groups. The labels discouraged the selection of high-sugar beverages and promoted lower-sugar options even when price and product attributes were taken into account.
However, the study found that lower-income consumers are less responsive to labelling cues, largely because of affordability constraints — meaning the measures are weakest among the very groups most exposed to diet-related disease. “The tax is not working for the people who need it most,” the findings imply.
The IPS recommended regular adjustments to tax rates to preserve their real value, and stronger public awareness of nutrition labelling. It said closing the gaps in awareness, equity and effectiveness is critical to Sri Lanka’s response to non-communicable diseases.
The findings add to recent public-health policy debate, including IPS research linking tobacco use to thousands of deaths a year, a pending Supreme Court case over the Gotabaya-era sugar tax cut, and a Court of Appeal petition on beer, rice and sugar levies.
