FDII today warned that imposing a discriminatory tax on certain food and drink products would have no health benefits and would further hit already hard-pressed Irish consumers. It said such an initiative was recently introduced in Denmark, but has now been reversed as authorities found it did not change consumer behaviour, but instead led to higher inflation and an increase in cross-border shopping.
FDII today warned that imposing a discriminatory tax on certain food and drink products would have no health benefits and would further hit already hard-pressed Irish consumers. It said such an initiative was recently introduced in Denmark, but has now been reversed as authorities found it did not change consumer behaviour, but instead led to higher inflation and an increase in cross-border shopping.
Commenting on the issue, FDII Director Paul Kelly said: “Fiscal measures specifically aimed at altering behaviour are complex to design and can be highly unpredictable. Ireland already imposes high taxes on many foods. While most foods are exempt from VAT, the standard rate of 23% applies to confectionary items like sweets, chocolate, crisps, ice-cream and soft drinks. An additional tax on sugar or soft drinks would leave Irish consumers out of pocket, paying one of the highest tax rates in Europe. The impact would be highly regressive, with a disproportionate impact on low-income families that spend a higher proportion of income on food.
“This flawed approach has been recognised by the Danish Government, which over the weekend announced it was withdrawing a saturated fat tax after one year and was also scrapping proposals for a sugar tax because of concerns about inflation, cross-border trade and the risk to jobs. The Danish Food Minister Mette Gjerskov said, “Now we need to try to do something else to address public health.”
“The Irish food and drink industry is fully committed to playing its role in helping to tackle obesity and other relevant public health issues. However, the obesity issue will not be resolved by taxation or other forms of discriminatory legislation aimed at individual food categories. An evidence based holistic approach is necessary, which should include measures such as reformulation, consumer awareness, the promotion of physical activity, and workplace and school well-being programmes.”
Source: FDII – Sugar Tax Would Have No Health Benefits but Would Hit Hard Pressed Consumers
