October 21, 2011 / 6:55 PM / 8 years ago

France backs tax on soft drinks

PARIS, Oct 21 (Reuters) - France’s parliament backed a tax on drinks containing added sugar or artificial sweeteners on Friday in a move that is expected to raise 280 million euros ($389 million) next year.

The tax equates to an extra 2 euro cents on the price of a typical 33-centilitre can of soft drink, said Gilles Carrez, general reporter for the Finance commission in the lower house of the French parliament.

Half of the tax raised will go into France’s state health insurance pot to help combat obesity, while the other half will be used to reduce costs related to agricultural workers.

French Budget Minister Valerie Pecresse, who originally opposed a tax on drinks with added sugar, agreed to back the move once so-called “light” drinks containing artificial sweeteners were also included.

The former will generate 240 million euros, while the latter will account for the remaining 40 million, Carrez said.

The head of France’s Ania national food industry association slammed the move and called the justification for the tax “ridiculous.”

“It won’t combat obesity at all,” Jean-Rene Buisson told RTL radio. “The argument the way it is presented by the government is completely unacceptable.”

Buisson added that the government should be clear whether the tax was designed to help reduce its deficit.

Lawmakers in the United States have also looked at introducing a soda tax but have come up against heavy lobbying by the beverage industry, dominated by Coca-Cola , PepsiCo and Dr Pepper Snapple Group .

Beverage analysts at Stifel Nicolaus wrote in a note to clients that the inclusion of artificially sweetened drinks had come as a surprise.

Western Europe’s biggest Coke bottler, Coca-Cola Enterprises , which buys syrup concentrate from Coca-Cola and bottles and distributes drinks in countries including the UK and France, would see all of its France revenue affected, the analysts wrote.

“Assuming the tax is fully passed on at retail, we estimate an added 2-4 percent increase in the average retail selling price of soft drinks in France,” the analysts wrote.

The law on the new tax still has to go to the French Senate for debate.

$1 = 0.720 Euros)

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