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Sugary drinks taxes

  • Nov 29, 2015 | Richard Asquith

Sugary drinks taxes

Countries around the world are looking afresh at taxing high sugar content drinks in order to tackle growing levels of obesity and diabetes.

Mixed global tax results

A 10% sugary drinks tax has already been judged a success in Mexico, which has seen flat and even declines in consumption following the introduction of levies in 2014.  Hungary and France have had such levies since 2011 and 2012, respectively.  However, Slovenian recently abandoned its plans to launch taxes on sugary drinks, and Denmark was forced to repeal its wider ‘fat tax’ in 2013 due to avoidance issues.  The experience in a number of US states has been that it does raise extra revenues, but does not materially curb sales.

New proposals from around the world include:

Finland relaunches fizzy drinks tax

Finland introduced a duty on sweets and ice cream in 2011.  It had already been taxing sugary drinks for some years. However, the European Commission forced it to announce the withdrawal of the €250 million per annum levy from the start of 2017 on the grounds that it taxed only foods subject to sugar duties. This had meant domestic suppliers were exempt from the tax, and so local (and EU) suppliers were given an unfair advantage. The Finnish health authority recently declared that it would introduce an amended tax based on sugar content instead.

Belgium tax shift

Belgium is proposing a new sugary drinks tax for 2016. The revenues from this levy would be used to help reduce Belgium’s labour taxes, which are amongst the highest in the world.

UK MPs call for 20% tax

The UK is the latest EU country to debate introducing a sugary drinks tax, although many argue it is disproportionality suffered by the poorer elements of society.  The UK Parliamentary Members' Health Committee last week called for a 20% levy on sugary drinks, and detailed labelling on the levels of sugar in everyday items.

Indonesia studies options

The Indonesian finance industry has asked the Health Ministry to produce recommendations on sugary drinks taxation.  The country already experimented with a Luxury Tax on some drinks recently.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara