Confectionery, ice cream tax to be revoked

Confectionery, ice cream tax to be revoked

Finnish regulators have said they will scrap a tax imposed on ice cream and confectionery in 2017.

Finland's Cabinet Committee on Economic Policy made the announcement earlier this week after the European Commission said the tax broke agreements over state aid. Brussels suggested the tax unfairly benefits other product categories that are also high in sugar, such as biscuits.

The criticism came as part of an informal procedure initiated by the Commission. If the case were to progress to the European Court of Justice, it could result in a retroactive tax, the Committee noted.

The tax had previously existed between 1926 and 1999 and was re-introduced in 2011. Since 2012, it has levied EUR0.95 per kilo of confectionery or litre of ice cream, which are considered equivalent.

During 2015, it is estimated Finland raised tax revenue of EUR109m (US$121.6m) from the sugar tax. Confectionery accounted for around EUR80m and ice cream for approximately EUR30m.

Merja Sandell, excise duty chief at Finland's finance ministry, said the Commission had unofficially warned the Finnish government the tax could break EU subsidy rules as the tax was selective. Sandell explained the levy, for example, applied to chocolate and not chocolate-coated cookies - or indeed cookies at all.

A tax on sugary drinks will be retained. However, Sandell told just-food that there may be a problem over including soya drinks within the tax, which the Commission considers close to milk. Those products may be excluded in future, she suggested.

Additional reporting by John Pagni.