Minister of Health seeks to impose sugar tax (2)

Soft drinks in a Selver supermarket. (Liis Treimann/Postimees/Scanpix)
9/8/2016 4:47 PM
Source: BNS
Category: Business

The Estonian Minister of Health and Labor Jevgeni Ossinovksi, who wishes to impose a sugar tax on sweetened drinks, estimates that the tax rate should be at least 10-15 percent in order to achieve the desired aims of reducing consumption and, in turn, childhood obesity. A food industry organization, however, called for decision-makers to admit that the tax is simply intended to help plug holes in the budget of the country's health insurance fund.

"Food taxes and subsidies can influence consumption and higher prices on sugar-sweetened drinnks are associated with smaller demand," the minister stated in his proposal ot the Estonian government.

The primary objective of the Ministry of Social Affairs is to reduce obesity in children caused by the consumption of sugar-sweetened beverages and the resulting negative health impacts. According to Ossinovski, levying a tax on food products that cause obesity could improve health indicators, especially if that tax were high.

"It is estimated that sugar-sweetened drinks account for the biggest share of energy derived from food, and consumption of sugar-sweetened drinks is more strongly connected with weight gain than any other food product or drink," said the minister.

More than half of Estonia's population is overweight or obese, and the proportion of such persons is growing fast, especially among children and young people, said Ossinovski. The occurrence of illnessess related to being overweight or obese, such as type 2 diabetes, is also on the rise.

In the minister's opinion, other direct intervention measures in addition to a tax on sugar should also be employed.

As currently planned, the new tax would be levied on sugar-sweetened beverages including sweetened milk and milk alternatives, tea and coffee drinks, energy drinks, sports drinks, sweetened waters and juices and similar products; natural juices would be exempt.

Food industry organization: 'Call a spade a spade'

The Estonian Food Industry Association (ETL) criticized the decision to frame the introduction of a sugar tax as an attempt to address health concerns rather than admit that the tax would be a means of plugging holes in the budget of Estonia's Health Insurance Fund.

"The ETL finds that, in a situation wherein the Health Insurance Fund has made outlays amounting to tens of millions [of euros] for the treatment of Hepatitis C and its budget urgently needs additional resources, it is cynical to refer all of a sudden to the objective of addressing the people's health indicators and reducing sugar consumption," said Sirje Potisepp, director of the food industry organization.

"If the sugar tax is needed to close holes in the budget of the Health Insurance Fund, that's what should be said," she continued. "But I'm fairly certain that [the tax] will spark outrage towards the country's leaders in many, as a large portion of food products will become more expensive, and other countries' experience have shown that health indicators will not improve as a result; people will just find more pocket-friendly options."

According to Potisepp, the association has more than once presented its proposals to the Ministry of Social Affairs' work group for the drafting of a green paper on nutrition and physical activity, however these have been ignored. "We've even taken our proposals to the minister, but it was made clear to us fairly quickly that there was no intention whatsoever of considering other solutions and that the sugar tax would be introduced anyway," explained the ETL's director.

One of the industry association's counter-arguments is that levying a tax on raw materials would only push up the price of domestic products, said Potisepp, pointing out that the country's stores were full of imported products which would offer consumers cheaper alternatives. "As long as more pocket-friendly options are available, the introduction of a food tax cannot be an effective instrument in combating obesity and changing consumption habits," she argued.

Another argument against the introduction of the sugar tax was that the implementation of food taxes entail very complicated regulatory mechanisms. A British analysis showed that a 20-percent tax on sugary drinks would reduce healthcare costs in London by 39 million pounds, however tax administration costs would strip London taxpayers of 2.6 billion pounds, noted Potisepp.

Furthermore, she added, any food taxes are discriminatory against that portion of the population capable of making moderate and balanced choices of their own.

Editor: Aili Vahtla

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