Tax on sweets takes experts by surprise

Parliamentary sweets tax lobbyist praises government decision

print this

By Jaakko Hautamäki and Jouni Mölsä
     
      The Finnish government’s decision to restore the tax on sweets and to increase the tax on soft drinks took nearly everybody by surprise: the Finnish citizens, the MPs lobbying for the issue, the industry in question, and even the Excise Tax Unit of the Ministry of Finance.
     
The chairwoman of the Parliamentary Committee for Health Promotion Sanna Lauslahti (Nat. Coalition Party) praised the tax decision at the check-out counter of a sweet shop in Helsinki’s Old Market Hall.
      Though the family is currently on a sweets strike, “mother is allowed a slip or two”, Lauslahti laughs.
      Lauslahti’s group has called for a tax on sweets, because in the past 20 years an average Finn’s consumption of candy has doubled to 14 kilograms per year.
      The number of overweight youth, in turn, has tripled in 30 years. The consequences are manifested in the national disease statistics.
     
Lauslahti is not yet aware of the details of the tax on sweets, but she suspects it will remain too low.
      “What we should have next is a tax on fat.”
      Lauslahti would introduce a municipal tax for example on butter as dangerous fat.
      In Lauslahti’s view, shops sell sweets in absurdly large packages.
      To her horror, a certain bag of sweets is even proudly called Jättimättö, “Colossal Cram”. The urge to stuff your face is too much in-your-face for her liking.
     
Ministerial Councellor Irmeli Virtaranta is so far unable to say precisely how the tax will be raised.
      “For example, with regards to sweets, first we need to get the exact consumption figures before any more precise estimates can be drawn.”
      The tax on sweets was last in force in 1999. At that time (still in the markka era) the tax was the equivalent of EUR 0.58 per one kilogram of sweets. More than likely the reintroduced tax will be higher than that.
      It is also more than likely that by next summer the tax will be extended to xylitol products, the group of sweets that caused the original tax on sweets to be discarded at the turn of the millennium.
     
Excise tax has been imposed on soft drinks for decades.
      This year this tax will earn the state around EUR 35 million. Since the government plans to increase its tax revenue by a cool 100 million, taxes on sweets and soft drinks should produce annual returns in the region of EUR 135 million.
     
Director Tero Kallio of the Finnish Food and Drinks Industries’ Federation (ETL) emphasises that the tax increase should not target just two industrial branches.
      In Kallio’s opinion, the tax on soft drinks has already been unfair. For one, only carbonated drinks are currently being taxed. Non-fizzy drinks are tax free.
      Kallio takes the view that the tax increase on soft drinks cannot really be justified by public health concerns, when a large portion of the drinks containing sugar remain outside the scope of the tax.
      According to Kallio the tax also distorts competition. “Breweries are not the only ones to manufacture soft drinks in Finland. There are many products that have not been taxed as soft drinks, and yet that is what they are”, Kallio points out.
      For example bottled milk coffee drinks, fruit drinks containing sugar, and drinkable yoghurt products are all exempt from the excise tax.
     
     
Helsingin Sanomat / First published in print 28.8.2009

More on this subject:
 We've had the Booze Cruise, make way for the Candy Rally

Previously in HS International Edition:
  Government reaches agreement on VAT cut on food (27.8.2009)

JAAKKO HAUTAMÄKI AND JOUNI MÖLSÄ / Helsingin Sanomat
jaakko.hautamaki@hs.fi, jouni.molsa@hs.fi