Excise duties to be levied on sweets and ice cream
The Government proposes to introduce an excise duty on sweets and similar products, chocolate, other products that contain cocoa, ice cream and ice lollies. The duty on sweets and ice cream would be 75 cents per kilogram.
It is proposed that the current excise duty on soft drinks be raised from 4.5 cents to 7.5 cents per litre of beverage. Besides juices, lemonades and mineral water, which are currently subject to the duty, it is proposed that natural mineral water and coffee beverages containing milk be brought within the scope of the levy.
No duty would be collected on products used as raw material for tax-exempt foodstuff or on products for special dietary use. Small-scale production of sweets, ice cream and soft drinks would not be subject to the new levies. Annual production totalling at most 10,000 kilograms of sweets or ice cream or 50,000 litres of soft drinks would be defined as small-scale production.
In addition, the Government proposes that the duty on certain beverages with a very low alcohol content would be raised to 7.5 cents per litre or 2.7 cents per centilitre of ethyl alcohol.
With the introduction of duty on sweets and ice cream and an increase in the levies on soft drinks, it is estimates that tax revenue will grow by EUR 100 million at an annual level. Tax revenues on sweets, icecream and soft drinks are calculated to total EUR 135 million per annum. Tax revenue for 2011 is anticipated to amount to around EUR 115 million, however.
It is estimated that the price of sweets will increase by about 1 to 15% following the excise duty collection. The price rise in ice cream could prove to be higher than for sweets. Price rises in soft drinks subject to the levies are expected to increase by 0.5 to 5%.
The proposal would create an increase of around 4 person-years for the customs authorities. The proposed new duty would increase the administrative burden for producers and importers of sweets and ice cream. It is difficult to estimate the overall economic impact because the price per kilo of sweets and ice cream varies considerably. The new levy will affect products where the price per kilo is low more so than more expensive ones, where the tax burden might prove to be very marginal.
Inquiries: Ms Tanja Nurmi, Senior Adviser, tel. 358 9 160 33077