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Industry surprised by Romanian 'fat tax' plan

By Jess Halliday , 08-Jan-2010

Plans to introduce a new tax on foods high in salt, sugar, and additives in Romania came as a surprise to the food industry, and the full impact will not be clear until after the details are hammered out over the next 10 days.

The Romanian parliament has adopted an amendment to its 2006 healthcare reform legislation that imposes a new tax on certain “non-recommended” foodstuffs as of 1 March, in an effort to combat obesity. Funds raised through the tax will be paid into a state treasury account for the exclusive use of the Ministry of Health, and will help cover the costs of dealing with obesity-related disease.

But the food industry was not included in any consultations, and has scant information about exactly which products will incur the tax and how it will be administered. Doina Cavache, manager of corporate affairs at Kraft Foods Romania, told FoodNavigator.com that the new tax has come as a surprise.

“The legislation doesn’t say anything,” she said, adding the implications for industry are likely to become clearer during discussions with the government next week.

The English translation of the document says the tax will be paid by “legal entities producing, importing or preparing non-recommended foodstuffs with high contents in salt, fats, sugar, food additives”.

No details are given about nutrient profiles that would render foods “non-recommended”, although fast food products, pastry-confectionery products, snacks, chips and beverages (except water and fresh natural juices) are identified as candidates.

No tax rates are set out either. However in his announcement of the move on Tuesday, health minister Attila Cseke estimated that the new scheme could bring in around €1bn.

Given the short time frame before the tax becomes applicable – under two months – Cavache said industry is “having to work overnight”.

Obesity increases the risk of non-communicable diseases such as heart disease, diabetes and certain forms of cancer. According to the International Association for the Study of Obesity, 37.3 per cent of Romanian men and 27.3 per cent of women are obese (BMI over 30).

Discussions elsewhere

Taxation of less healthy food products has been mooted in a number of countries. In particular, a ‘soda tax’ on sugary soft drinks was the cause of great debate in the US in 2009.

In 2008, France shelved plans to increase the TVA (VAT) on foods with high salt and sugar from 5.5 per cent to 19.6 per cent, as the economic crisis was already having an impact on spending power.

In the UK, some basic foods a VAT zero-rated while others are subject to the standard 17.5 per cent rate. In some cases, cakes and biscuits deemed to be traditional bakery products fall under the zero-rated banner, even if they are laced with fat and sugar. In the UK all VAT, no matter what product it is levied on, is channeled to the central coffers and not necessarily earmarked for health care.

According to media reports, Taiwan’s Bureau of Health Promotion is currently drafting a bill to levy tax on sugary drinks, confectionery, cakes, fast food and alcohol. As in Romania, funds would be used for health care. However the Taiwanese plan is unlikely to become law before 2011, as it must be submitted to the parliament for approval.

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