Planned tax on sweets to include ice cream

Reinstatement of levy to be postponed; tax on sweets will come into force in 2011 at earliest

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The government's plans to restore the tax on sweets and to increase the tax on soft drinks look set to be postponed slightly.
      The idea is now to introduce the government’s tax bill to Parliament in September with the new taxes coming into force in 2011 at the earliest.
      Previously the aim was to complete the legislative phase by the beginning of July this year.
     
In addition to sweets, the proposals call for tax to be levied on ice cream as well.
      “Our starting point at this stage is that the tax will widen to include ice creams”, says finance secretary Veli Auvinen from the Ministry of Finance.
      The previous tax on sweets, which was abolished in 2000, only covered chocolates and various types of candies.
      “As a product group ice cream as clearly defined and comparable with sweets. For example with biscuits, buns, and pastries, drawing the line would be more difficult”, Auvinen continues.
     
The government decided on the restoration of the tax on sweets in its last autumn’s budget negotiations.
      Apart from the desire to increase the revenue from taxes, behind the move lurks the aspiration to avert health hazards such as obesity among adolescents.
      An aim was set to bring about EUR 100 million into state coffers through the tax on sweets and the tightening of the tax on soft drinks.
      In recent years the proceeds from the tax on soft drinks have been around EUR 35 million. Hence taxes on sweets and soft drinks should produce aggregate annual returns in the region of EUR 135 million.
     
At the moment, no one seems to know exactly how large the presented levies on sweets, ice cream, and soft drinks will be.
      Within the Ministry, various calculation models are being prepared in an attempt to find out how the EUR 135 million tax revenue goal could be achieved.
      It is likely that the tax on sweets will meet in proportion the level of its predecessor that was abolished in 2000.
      At that time the tax was the equivalent of 59 cents per kilogram, or 5.9 cents per a 100g bag of sweets.
     
According to Auvinen, the tax on ice cream is likely to settle around the same level as that on chocolate and sweets.
      Usng the old taxation level as a benchmark, this would mean an increase of 30 cents on the price of a one-litre tub of ice cream or, if the level is raised, slightly more.
      The taxation of soft drinks also looks set to widen from soft-drinks, juices, and carbonated waters - for which the tax has been 4.5 cents per litre regardless of their sugar content - to include bottled milk-coffee drinks as well, which together with yoghurt products have previously been exempt from such taxation.
     
The food industry of course vehemently opposes the taxation of sweets and new products such as ice cream.
      “If one wants to avert health hazards, the right way to go about it is to increase education about them. Increasing tax revenue, on the other hand, should be done through raising the level of VAT”, says Finnish Food and Drink Industries’ Federation (ETL) Director General Heikki Juutinen.
      National Nutrition Council Secretary General Raija Kara sees the tax on sweets as a positive development, but regards its widening to cover ice creams as problematic, unless other products containing sugar, such as sweet pastries, are also included.
      “However, from the health point of view it would be good if products that children consume a lot were taxed”, Kara says.


Previously in HS International Edition:
  Tax on sweets takes experts by surprise (1.9.2009)

See also:
  We´ve had the Booze Cruise, make way for the Candy Rally (1.9.2009)

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