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Confectionery tax will distort competition, claims Finnish industry body

By Jane Byrne , 23-Sep-2010

The decision by the Finnish government to reintroduce a tax on sweets, chocolate, cocoa products, ice cream, and ice lollies is unfair and will discriminate against individual companies in the food industry, said the Finnish Association of Biscuits and Confectionery Industries.

The tax, which will come into effect at roughly 75 euro cents to the kilogram at the beginning of next year, is in fact a renewal of a former levy, which was lifted in 1999.

The government, which announced its decision last week, is also set to increase the existing excise tax on soft drinks.

Other sugar based products remaining outside the scope of the tax include biscuits, baked goods, yoghurts and yoghurt drinks, puddings, jellies and mousses, as well as granulated sugar.

Finland is ranked in the top five European countries for chocolate and sugar confectionery intake, with a 13kg per capita consumption rate.

But the upshot of the levy will be a switch by consumers to the more affordable product categories such as biscuits and other sugar based products, said David Nuutinen, managing director of Leaf Suomi Oy and chairman of the Association of Biscuits and Confectionery Industries.

The Association has been lobbying against the levy since its reintroduction was first proposed a year ago, and during the stakeholder consultation process, Nuutinen said the industry representative body was successful at having the tax reduced from 95 euro cents to the kg down to the current 0.75/kg.

But he stressed that the trade group maintains that the excise model, based on customs tariff classifications, lacks logic.

“Many product groups containing sugar remain outside the scope of the tax model, while spring and mineral waters and functional foods containing Xylitol are going to be levied,” he said.

Nuutinen told this publication that the Association believed that the government’s primary motivation for the excise duty was fiscal rather than health orientated and the trade group is calling for a less arbitrary model such as a broader sugar tax or the introduction of VAT on all food and drink products as a fairer way of balancing the budget.

The narrow scope of the current approach makes it tough on individual companies, he added.

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