Romanian soft drinks producers say overtaxing sugar drinks will lead to layoffs

Romania's government won't collect as much as it expects from its proposed tax on sugary drinks, the national association of soft drinks producers, adding the tax may lead to layoffs and said factory shutdowns.

The association also said the tax would create a dangerous precedent in the overtaxation of certain foods.

The proposed tax would have a major impact on the soft drinks sector, whose suppliers are 90% local. Among possible effect the association lists higher inflation, halting investments, layoffs and even shutdown of factories. The soft drinks industry employs over 60,000 people, of which 6,500 would lose their jobs.

Romania's finance ministry put up for public debate a bill introducing a tax on soft drinks depending on sugar content.

The tax would be as high as RON1 per liter for soft drinks with a sugar content of more than 8 grams per 100 milliliters.

The ministry cited public health concerns in its motivation for the tax.

The association of producers said soft drinks would be the only products in the food industry to be overtaxed and the proposed tax is the highest among European countries. It said the proposed tax is triple compared with France and Belgium, double compared with the Netherlands and similar to that in the UK, which are al countries where the purchasing power is much higher than in Romania.

“The government won't collect the amounts it expects. An industry shaken to the core will contribute less to the state budget due to a profoundly negative impact that will affect the entire chain from farmers growing sugar beet to wholesalers and retailers,” the association said.

The association added the government's implementation of the tax lacks transparency and is unfair to the industry.

“In Europe, just 3% of the average daily calorie intake for an adult is represented by soft drinks and the government's sudden concern for public health is just an excuse masking its desperation to squeeze out more money to fill budget gaps,” the association concluded.