ESTONIA: Soft drinks producers take sugar tax issue to the European Commission

Published: 05/19/2017, 11:09:29 AM

The Soft Drink Producers' Union has decided to turn to the European Commisssion regarding the planned tax on sweetened beverages as they find that the tax would constitute prohibited state aid which would give competing products an advantage, according to Estonia's ERR news.

Union board member Nele Normak told ETV news broadcast "Aktuaalne kaamera" that soft drinks and juice drinks are similar and can be consumed as an occasional alternative to yogurt- and kefir-based drinks.

"Overall we are still looking at where extra sugar is added; these are the product groups which should be treated equally," said Normak.

The union is also dissatisfied with the bill drafting process and the lack of impact analyses.

The Ministry of Finance found out about the filed appeal via the media.

"We know some views which were arguments both in the analysis by Sorainen and stated by representatives of the Soft Drink Producers' Union," said Ministry of Finance's Deputy Secretary General of Tax and Customs Policy Dmitri Jegorov. "There were certain factual errors and there was some ambiguity in the argumentation, but as I have not seen this most recent appeal then I do not know whether it includes those same arguments."

Whether or not the European Commission will accept the appeal will be determined within the next couple of weeks.

"Unfortunately matters related to state aid cases are quite complicated - it is not worth speculating here - but on our part we have done everything to ensure that it is error-free," Jegorov claimed.

Should the Commission rule in favor of soft drink producers, the dairy sector in particular would suffer as a result, as state aid received by means of untaxed products would have to be recovered.

Allar Jõks, the lawyer representing the soft drinks' union, noted that it may be possible that Estonia is fined as well.

"Naturally it is also possible that if some businesses find that their competitive situation is worsened as a result, they can submit a claim for damanges," he added.

The amendment taxing sweetned beverages is scheduled to take effect on Jan. 1, 2018.