Government agrees sugar tax is needed, but final details unconfirmed

Soft drinks in a grocery store.
Soft drinks in a grocery store.

A sugar tax will be introduced from 2025 which is estimated to bring in at least €25 million in revenue, the government has agreed. But exactly how much tax shoppers will pay has not yet been decided.

The Riigikogu approved a tax on sugary drinks in 2017 under former Prime Minister Jüri Ratas' (Center) first term in office. But the legislation was never enacted as former President Kersti Kaljulaid did not promulgate the law, arguing it conflicted with the constitution.

The amount of tax paid would have been dependent on the amount of sugar added to each beverage.

For example, a two-liter bottle of Coca-Cola contains 10.6 grams per 100 milliliters, which is a relatively high amount. This would have resulted in an additional tax of 60 cents, which is almost 25 percent of the current price.

Exactly how drinks will be taxed in the future is still up for debate. Minister of Health Riina Sikkut (SDE) said the coalition has only agreed in principle that a tax should be created.

Riina Sikkut. Source: Ken Mürk/ERR

She said the estimated revenue expected to be generated is based on forecasts from six to seven years ago.

"Forecasting is not an exact science anyway, and in this case, we are dealing with an approximate or expected tax revenue, and this forecast will certainly be refined in the course of the elaboration of the specific draft, once the tax rates are fixed," Sikkut told Friday's "Aktuaalne kaamera".

High sugar consumption leads to numerous health problems, such as cardiovascular diseases or types of diabetes.

The logic behind the tax is simple: the higher the price, the fewer drinks consumed. This is what happened in Portugal when a similar tax was introduced.

"Positive health results are already being seen, with 1,600 cases of obesity and 27 deaths averted a year after the tax was introduced. It also saved €11 million in treatment costs for obesity-related diseases that would otherwise have been spent on treatment," said Kristina Köhler, the World Health Organization's representative in Estonia.

Sirje Potisepp. Source: Priit Mürk/ERR

In this region, Finland and Latvia have also introduced similar taxes.

However, Sirje Potisepp, head of the Estonian Food Industry Association, said the research is ambiguous.

"The fact that sales of products are declining is well known, but there are no such science-based studies that link this to public health. On the contrary, people are simply being diverted to other sweeter products and that is what has happened in all those countries that have introduced a sweetener tax in one form or another," she said.

Potsepp emphasized that the taxation of sweetened beverages mainly affects poorer people, and Estonia already has one of the highest VAT rates in Europe.


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Editor: Barbara Oja, Helen Wright

Source: Aktuaalne kaamera

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