Taxation Abroad

In July 2011, the Hungarian government approved a new law aimed at introducing an excise tax on foodstuffs and beverages rich in fat, sugar, salt and caffeine (≥20 mg of caffeine per 100 ml). The so-called “hamburger tax”, which passed with 255 votes for, 54 against and 36 abstentions, became effective September 1, 2011.

• The measure was motivated by a rapidly expanding obesity epidemic in the country (18% of the population) and the chronic diseases associated with the problem, as well as the additional pressure that this was exerting on the public purse.
• The revenues from this tax, which are projected at $100 million, are to be invested in prevention.
• Hungary is thus imposing a charge of about:
  • $1.25 per litre on energy drinks
  • 3¢ per litre on soft drinks

On October 21, 2011, France’s National Assembly (the country’s elected legislative body) voted to impose a tax on sugar-sweetened beverages twice as great as initially proposed by the government. The Assembly also voted in favour of a tax on beverages containing artificial sweeteners (e.g., aspartame). The two taxes, however, have different objectives.
On December 28, 2011, the Constitutional Council of France (the country’s constitutional court) ratified the creation of a “soda tax”, which became effective January 1, 2012, as well as the creation of a tax on artificially sweetened beverages.

• Dual objective: Original public health objective and reduction of farm labour costs.
  • The Constitutional Council reportedly deemed that the purpose of the tax was not to fight obesity but rather to reduce the government’s debt, which is what industry groups have argued all along.
• Loi de finances pour 2012 (annual budget law) published in the Journal officiel de la République française (official gazette of the French Republic) on December 29, 2011 (in French)
  • Article 26: provides for the tax on sugar-sweetened beverages to be doubled from 3.58 to 7.16 euro per 100 litres or 7.16 cents per litre.
  • Article 27: implements a new tax in the same amount (7.16 euro per 100 litres) on artificially sweetened “low-cal” beverages. 
• Target: Sugar-sweetened beverages (e.g., soft drinks, fruit beverages, flavoured milk, etc.) and artificially sweetened beverages. Syrups, fruit juices with no added sugar, smoothies, yogurt drinks, infant formula, medically prescribed nutritional drinks, and exports are excluded. 
• Tax rate: Excise tax of 7.16 euro per 100 litres. The amount of this contribution will be collected January 1st of each year beginning in 2013 in a proportion equal to the growth rate of the consumer price index excluding tobacco for the previous year. 
• Estimated revenue: 280 million euro. 
• Impact on price of sugar-sweetened beverages: €0.02 per 330ml can or about €0.06 per litre ($0.08). 
• How revenue will be invested: 120 million euro will be invested in the national health insurance fund and 160 million will be allocated to agriculture.

It need be reminded that the moment this tax was announced by the French Prime Minister in August 2011, the French national association of food industries (ANIA) launched a lobbying campaign aimed primarily at refuting government claims that the tax was motivated by public health concerns with obesity.
 

On November 2, 2011, under its budget law for 2012, Algeria imposed a tax of 0.5% on the sales volume of soft drink producers. The revenue from this dedicated tax will contribute to the national anti-cancer fund.

• Objective: Health – invest in the national fund to fight cancer.
• Target: soft drinks. 
• Impact on price of sugar-sweetened beverages: Minimum of 5 dinars per bottle (if the tax is incorporated in the sales price of products) or $0.07. 
• Industry reaction: The Algerian association of beverage producers immediately took a stance against this tax and demanded its removal.

In July 2010, the Danish government increased taxes by 25% on a variety of products, including ice cream, chocolate, SSB, and soft drinks. The aim is to reduce the prevalence of various diseases and to improve the state of health of the population.

After debating the matter since the beginning of 2011, Denmark in October became the first country in the world to impose a tax on products containing more than 2.3% saturated fat.

In June 2010, the city of Baltimore gave final approval to a 2-cent tax on bottled beverages. For more information.

In the United States, the idea is frequently debated and proposed. For 2011, 15 states havetabled bills respecting a tax on SSB.

Where are these bills at?

To track the progress of these different bills, the Yale Rudd Center for Food Policy and Obesity has made available to us an extremely useful tool updated on a very regular basis.

Health Minister James Reilly announced on September 26, 2011, that he was examining the possibility of levying a tax on sugar-sweetened products in his country as a means of countering the obesity epidemic.

A proposed bill would give local authorities the power to introduce a tax on soft drinks. Opposition health critic Richard Simpson pointed out that, in his region, the consumption of sugar-sweetened soft drinks was 20% greater than in England.