Eric Byrne (Dublin South Central, Labour)
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71. To ask the Minister for Finance if he will set out the feasibility of introducing a tax on foods high in saturated sugar, salt, and saturated fats; if such a tax has been introduced in other jurisdictions; the level required to yield €188 million in one year; and if he will make a statement on the matter. [39826/15]

Michael Noonan (Limerick City, Fine Gael)
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As the Deputy will be aware, there have been a number of proposals in recent years to impose taxes on food and beverages to achieve public health objectives. Generally, such proposals encompass either specific products, such as sugar sweetened drinks, or a range of food products with certain characteristics, such as foods with saturated fats above a certain level, foods with added sugar, or foods with added salts.

In 2011, Denmark introduced a tax of DKK 16 (at that time €2.15) per kilogram of saturated fat on all food products produced or imported into Denmark which exceeds 2.3g per 100g in saturated fat. This tax was provided for the in 'Danish Fat Tax Act 2011', which commenced on 1 October 2011. The Danish 'Fat Tax' applied to meat, certain diary products, animal fats, edible oils and other fats, margarine, spreadable composite products, and other products which are considered substitutes of the above-mentioned foods.

The tax was  collected at the first point of supply in Denmark, and producers and importers of such products were required to register with the Danish tax authorities, to facilitate the collection of the Fat Tax. Such persons could use publicly available information which provided standards for the levels of specific foodstuffs, the amount of saturated fat based on technical analysis of the specific food product, or nutrition labelling.

In November 2012, the Danish Government made a decision to abolish the Fat Tax, citing concerns relating to cross-border shopping and the significant compliance costs imposed on food producers, many of whom were small and medium-sized enterprises.

In September 2011, Hungary imposed taxes on energy drinks, snacks with a salt content in excess of 1g per 100g, sweets, biscuits, and ice-creams. In January 2012, these food-related taxes were extended to chocolate with added and total sugar of greater than 40g per 100g and a cocoa content of less than 40g per 100g, to all sweetened products with added and total sugar of greater than 25g per 100g, and to syrups or concentrates with a fruit content of less than 25%. All of these taxes are imposed volumetrically, with the duty imposed a specific amount per quantity of the product itself, rather than the added sugar, added salt or saturated fat content as in the Danish case.

I believe that Danish case indicates that it is feasible to introduce the types of tax referred to by the Deputy. However, the feasibility of a tax does not imply that it is desirable to impose one. I think any proposal would have to take into account, inter alia, the compliance cost for smaller producers of products such as meat and cheese, the requirements for additional Revenue resources to administer a tax of this nature, the possible cross-border effects and, not least, the potential impact of such measures on the Agri-Food Sector. 

I would also note that any tax introduced would have to comply with Article 110 of the Treaty on the Functioning of the European Union, which prohibits Member States imposing internal taxation of any kind on products of another Member State in excess of that imposed directly or indirectly on similar domestic products. Furthermore, it is a requirement that a Member State must notify the Commission under Directive 98/34/EC ('the technical standards Directive') of a draft law to provide for the aforementioned taxes. Upon notification, the Commission and other Member States may raise concerns as to whether the draft law is a potential barrier to trade. In addition, such taxes may give rise to State aid concerns. While not insurmountable, these are matters which policy makers must be cognisant of when designing a new tax or levy.

The Deputy may be aware that Norway, France, and Finland currently impose a volumetric tax on sugar sweetened drinks. A number of other non-European Economic Area states impose special ad valorem taxes on soft drinks, including Norway, Australia, and Mexico.

At this time, there is not enough publically available information to estimate the yield from a volumetric tax on added sugar, added salt, and saturated fats.