As a result of complaints made by manufacturers of soft drinks, the government was forced to also add dairy products to the list of drinks to be subject to the so-called sugar tax. It would then ask the European Commission for an exception, Minister of Health and Labor Jevgeni Ossinovski (SDE) said.
“Developing this law, the government wanted the tax to be fairly narrowly limited, basically a lemonade tax that would also be applied to juices,” Ossinovski said at the government press conference on Thursday. “We have also handled this law in that exact framework and planned the potential state budget revenue according to that," he said.
"The EU has its charms as well as its pains, in this context we are dealing with a regulation concerning the domestic market, which must get the necessary approvals for state aid," Ossinovski said. He added that the government had previously taken into account the need to apply for state aid for the producers of natural juices, but dairy products were a new addition.
"The situation regarding sweetened dairy products has come up because as we know, the soft drinks producers have appealed to the European Commission with the aim of showing how unfair it is that yogurts [producers] don’t have to pay tax," the minister said.
He added that the government then decided to apply for an exception also for dairy products, as legally it was possible that the European Commission may agree with the soft drinks manufacturers, even though there were fairly few substantial arguments.
Ossinovski said that in case the Commission should later decide that yogurts also had to be taxed, and they had not been taxed in Estonia, producers will have to retrospectively pay the whole intermediate sum. "This would be a great blow to the dairy producers, which is not what we want," the minister said, adding that dairy products would be taxed until the European Commission issues the necessary authorization for state aid and dairy products could be exempt from the tax.
The minister added that the government hoped the exception would be granted before the law enters into force on Jan. 1 next year.
Editor: Dario Cavegn