Interim report of the Sugar Tax Working Group completed
The Sugar Tax Working Group, which began its work at the beginning of 2012, delivered its interim report to the Ministry of Finance on 5 July 2012. The report presents the working group’s report to date, possible tax models and the preliminary conclusions of the working group. The final conclusions and recommendations will be presented in the final report, to be submitted at the end of November 2012. The intention is to utilise opinions received on the interim report to gather information on the effects of different tax models for the further work of the working group.
The options include a tax according to the total sugar content of foodstuffs or according to the amount of added sugar, or the extension of the present excise duty on sweets to new products.
The working group has examined in its report various possible tax models. The working group proposes that food groups that generally contain sugar and from which a lot of sugar is obtained be subject to the tax. A sugar tax model based on a product’s sugar content would cover more product groups than the present sweet tax model, which is based on a product’s weight or volume. The sugar tax could be based on the total sugar content of a product or only on the amount of added sugar.
According to the working group’s proposal, the following items, among others, would be taxable under a tax model based on sugar content: sweets, juices and soft drinks, sweet cakes and pastries, sugar, syrups, fruits and vegetables preserved with sugar, jams and milk products sweetened with sugar. In an extended sweets tax, sweet cakes, pastries and biscuits, for example, would also be taxable in addition to sweets, ice cream and soft drinks, which are subject to the present sweets tax. The taxation of fresh, unprocessed vegetables, fruits and berries would not be conducive to healthy nutrition and therefore they would not be brought within the scope of sugar taxation, even though they contain sugar.
EU law sets many boundary conditions for taxation
Both national and EU legislation set mandatory boundary conditions for the tax model. For example, general tax legislation provisions require the precise specification of taxable products, and EU law significantly limits opportunities to select taxable and tax-free products freely. The most significant restrictions for the tax model come from the EU law’s non-discrimination principle and from state aid rules. European Union law requires in practice that a tax must be the same for both domestic and imported products.
Moreover, the tax determination criteria and the taxation procedure must be consistent, such that the tax is determined based on the same criterion (for example, total sugar content, added sugar and product weight) irrespective of a product’s origin. In addition, the tax system should be such that no one can be considered to receive a competitive advantage.
Through taxation it is possible to influence the price of products, but only indirectly people’s health. Socially, health-promoting choices can be influenced not only by taxation but also by legislation, recommendations, guidance and education, communication and advertising as well as through the health and social services system and environmental planning. When constructinga tax model, the goal, however, should be a model that as far as possible directs consumers towards healthier choices.
The working group will review and assess during the autumn the kind of effects that the various options would have. The working group will take the opinions it receives into account in its further work.
Interim report of the Sugar Tax Working Group (in Finnish)
Further information: Chairman of the Working Group, Senior Specialist Tanja Nurmi, tel. 02955 30335 (until 6 July), Secretary of the Working Group, Senior Officer Hanne-Riikka Nalli tel. 02955 30316 (until 6 July) and Financial Adviser Veli Auvinen tel. 02955 30384 (from 24 July 2012)