Italy to tax plastic and sugar, angering producers

ROME (Reuters) - Italy’s 2020 budget will include new taxes on plastic and sugary drinks designed to raise 1.3 billion euros, government officials said on Monday, prompting protests from producers.

The plastic tax rides a wave of international action against pollution, and is alone intended to raise almost 1 billion euros ($1.11 billion), a source familiar with the matter told Reuters.

Taxes on sugary drinks, intended to raise revenues while also addressing health issues such as obesity, diabetes and tooth decay, have already been adopted in many countries including Britain and France, and parts of the United States.

The plastic tax obliges firms to pay a one euro levy per kilogram of plastic produced. The sugar tax will affect non-alcoholic beer, fizzy drinks and fruit juices with added sugar or sweeteners. Both levies will be effective from July.

The budget will be presented to parliament in the coming days and must be approved by the end of the year.

Coca-Cola’s Italian subsidiaries and partners will be among the firms hardest hit.

Sibeg, which bottles and markets Coca-Cola in the Sicilian city of Catania, estimates the levies will reduce hits revenues by 27% to 84 million euros, and cut profits by 16.7 million euros.

Sibeg chief executive Luca Busi told the news agency Ansa the taxes were of no benefit to health or the environment but were “only aimed at raising cash, at a heavy cost for consumers, workers and companies”.

The new government, which took office last month, is scrambling for ways to keep a lid on the deficit while cutting income tax and scrapping a hike in sales tax worth 23 billion euros that was penciled in by the previous government.

The coalition of the anti-establishment 5-Star Movement and the center-left Democratic Party has set a 2020 deficit target of 2.2% of gross domestic product, stable for a third consecutive year.

Reporting by Giuseppe Fonte and Gavin Jones; Editing by Kevin Liffey