Sugar tax to increase dairy, juice prices unless EU grants exception

Despite the original plan to impose a sugar tax only on sweetened soft drinks, the according bill passed into law on Monday by the Riigikogu includes dairy drinks as well as fruit juice- writes

Starting next year the Estonian state will levy a duty of €0.30 a liter on sugary drinks including dairy products and fruit juices. According to producers, this will have a massive impact on prices.

“If Põltsamaa apple juice now costs €1.09 in the shop, then with the entering into force of the 30-cent tax the retail price would increase by at least 46 cents to €1.55,” marketing director of Põltsamaa Felix, Marek Viilol, said on Thursday. “This is based on the assumption that the profit margin as well as value-added tax will remain the same.” The same thing would happen for yogurt, he added.

According to the Ministry of Finance, the state doesn’t want to tax dairy drinks and natural juices, but as they fall into the same product and market category will have to apply for an exception with the European Commission in order to exempt them from the new sugar tax.

As long as such an exception isn’t granted, the tax will have to be paid on all of the products in this category.

As the ministry’s press spokeswoman, Maria Murakas said, the aim is to get a positive decision by the European Commission before the tax enters into force. At the same time, the application had not been submitted yet.

The sugar tax will enter into force early in 2018 and is expected to trigger a price hike. Soft drinks, juices, and drinks on the basis of dairy products will all become more expensive.

The government is hoping to gain additional revenue of €15 million in 2018, €16 million in 2019, and €17 million in 2020.

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