President sends sugar tax law back to parliament

If implemented, the tax could temporarily increase the price of sugary drinks by 35-50 percent. Source: (AFP/Scanpix)

President Kersti Kaljulaid on Monday did not proclaim a law that would have introduced a tax on sweetened drinks. The president based her decision on an exemption given to shipper Tallink. She sent the law back to the Riigikogu.

“I a in favor of the goal set with the so-called sugar tax to guide the people of Estonia and first and foremost children and youth to consume less sugar and thereby decrease the health damages caused by excessive consumption of sugar,” Kaljulaid said in a press release.

“Nevertheless, I will hereby leave the sugar tax law unproclaimed as my standpoint is that it is not in accordance with the principle of equal treatment set out in the 12th paragraph of the Constitution.”

Kaljulaid pointed out that the law would exempt drinks sold on board a ship or plane on international routes. This constituted a unjustified advantage granted for one sector and hence was not consistent with the principle of equal treatment set out in the Constitution.

On June 19 the Riigikogu passed a law on the taxation of sweetened beverages according to which all sweetened drinks containing more than 5 grams of sugar per 100 ml will have to be taxed. A total of 52 MPs were in favor of the bill, 37 were against it. There were no abstentions.

The bill specifies that the tax rate of a beverage with a sugar concentration of 5-8 grams per 100 ml is 10 cents per liter. The tax rate for drinks with a higher sugar content is 30 cents.

The Food Industry Association, the Chamber of Agriculture and Commerce and the Chamber of Commerce and Industry had sent a letter to the president, asking her not to promulgate the law as it was unconstitutional and went against good legislative practice.

Listed shipper Tallink Grupp AS was granted the right to sell sweetened drinks on its ships also in the future without paying additional tax. The amendment was backed by 62 MPs and opposed by 21 MPs.

The clause was added to the bill at the proposal of the parliament’s finance committee. Tallink had presented to the committee its position regarding the tax on sweetened drinks on May 23.

Editor: Dario Cavegn

Source: BNS

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