Finance committee greenlights sugary drinks bill for 1st reading

TALLINN - The finance committee of the Riigikogu on Thursday gave its nod to a bill seeking to subject sugary drinks to a tax in Estonia and sent it to the plenary for the first reading.

Annely Akkermann, the chair of the finance committee, said the aim of the tax is to reduce the amount of sugar and sweeteners in sweetened drinks in order to encourage people to consume drinks with less sugar or without sugar and sweeteners. According to the Reform Party MP, the proposed tax aims to encourage producers to add less sugar and sweeteners to beverages.

"The tax rates depend on the sugar content and the use of sweeteners in the product," she added. "Additionally, sweetened beverages containing both sugar and sweeteners will also be taxed."

Aivar Kokk, a member of the finance committee, meanwhile said that studies carried out in other countries have not clearly demonstrated that taxing sweetened beverages will lead to weight reduction.

"Moreover, the food industry has already reduced the sugar content in beverages. The introduction of the tax will have a noticeable impact on our food industry, leading to price increases for products, ultimately borne by the consumer," Kokk, MP from opposition Isamaa party, said.

Under the bill, sugary drinks with at least 5 grams of sugar per 100 milliliters will be taxed. A tax rate of 0.15 euros per liter will apply to drinks with sugar content of at least 5 grams but less than 8 grams per 100 milliliters; a tax rate of 0.45 euros per liter will apply to drinks with a sugar content of at least 8 grams per 100 milliliters. Drinks containing only sweeteners or both sweeteners and sugar with a sugar content of less than 5 grams per 100 milliliters will be taxed at 0.15 euros per liter regardless of the amount of sweetener.

The tax will be applied to beverages when they are first made available on the Estonian market, and will be paid by the drink importer, the purchaser from another European Union member state, or the Estonian producer.

The tax also applies to drinks containing sweeteners such as saccharin, aspartame, thaumatin, sucralose, and steviol glycosides to prevent manufacturers from increasingly using sweeteners to replace sugar.

The bill does not classify drinks and preparations made available as dietary supplements as sugary drinks. Fruit, berry, and vegetable juices without added sugar or sweeteners are exempt from the tax. Milk and dairy products, as well as plant-based drinks consumed as milk alternatives, are also exempt. Alcohol as defined by the Alcohol Act, medicines, and sweet drinks used in the production and preparation of medicines, drinks made on-site at the point of sale that are unpackaged and intended for immediate consumption, and food intended for medical reasons or as meal replacements for weight loss are exempt from the tax.

The finance committee decided to forward the sugary drinks tax bill initiated by the government to the plenary for the first reading on April 30, with a proposal to complete the first reading.