Treat tax | The food industry and trade are against the delicacy tax: “Naive”

food industry and the trade sector have a negative attitude to a health-based excise tax because it would be difficult to regulate and would be an “administrative nightmare” for companies.

Director General of the Institute of Health and Welfare Markku Tervahauta suggested on Wednesday In an interview with HS, sugar, salt and fat tax as a possible model, the model presented by the umbrella organization of social and health organizations Sosten a couple of years ago.

In the model, the tax would depend on the criteria of the Swedish Heart Association and Diabetes Association’s Heart Mark. In the model, Sydänmerkki products would be tax-free, and in addition, the model would have two other tax categories.

CEO of the Food Industry Association Mikko Käkelä says that Sosten’s model is not a solution for a health-based tax. According to him, the model is “naive” and “simplified” and is based on the mere hope that raising the consumer price of food would change consumer behavior.

“The model does not consider that there can be a cheaper foreign import product in the same product category. The tax can guide consumer behavior in such a way that the consumer buys a foreign import product of the same type instead of a domestic product,” says Käkelä.

“Then there is no health effect and the employment effect of the product disappears in Finland.”

The food health tax would apply to both domestic and foreign food manufacturers, but the tax would only increase the administrative reporting of domestic manufacturers.

Domestic companies would have to report to the authorities how much sugar, salt and fat are in the products. Foreign manufacturers would not have a corresponding reporting obligation, because the products come to Finland through customs.

According to Käkelä, Soste’s health tax model would also be discriminatory because it would only target packaged food.

“This cannot be done in the EU. The model should apply to both packaged and unpackaged foodstuffs. In what way would cafes, pastry shops and restaurants be covered by the tax and how would they report? It would be an administrative nightmare for the food industry, which would have an impact all the way to agriculture,” says Käkelä.

Also The trade sector is generally opposed to health-based taxes.

“The trade generally has a negative attitude towards these types of taxes, which are ineffective and difficult to target. These taxes cause a lot of bureaucracy,” says the CEO of the Finnish Trade Union Mari Kiviniemi.

In the years 2011–2017, a health-based sweets tax was in use in Finland. It targeted sweets, ice creams and soft drinks. Finland had to give up the tax because the European Commission considered it to distort competition.

“The sugar tax that was in use shows that it is terribly difficult to regulate such taxes.”

CEO of Päivättäitavarakauppa ry Kari Luoto says that the “fair” regulation of health-based taxes is difficult based on previous experiences. By fairness, he means that the tax would treat all products in the same way.

Foodstuffs have already become more expensive due to the effects of the corona pandemic and Russia’s war of aggression, and according to Luoto’s assessment, the health tax would increase the price of food even more.

“If the price of food rises more and more, there may be big changes in consumers’ nutrition. Even in the nutritional recommendations, it is said that individual nutrients do not promote or weaken health, but the overall diet is decisive.”

Food industry Käkelä says that, in addition to the energy crisis and rising interest rates, the industry’s desire to invest has already been weakened by political uncertainty about a possible health tax.

According to the investment survey of the leading organization, the industry was supposed to invest 1.1 billion euros in Finland last year, but the amount remained at 400 million euros.

“The political risk of the health tax caused many companies to take overtime,” says Käkelä.