Denmark has announced that it will abolish its soft drink tax as part of a raft of measures intended to create jobs and boost the economy.
The tax has been in place since the 1930s, and Danes are currently taxed DKK 1.64 (about €0.22) per litre of sugar-sweetened soft drink. The tax will be reduced by half on July 1, 2013 and then fully eliminated at the start of 2014 – but it does not affect other existing excise duties on sugar-containing products, such as those on confectionery and ice cream.
The government said that it expected elimination of the tax would lead to a loss of about DKK 450m (€60.35m) per year in revenue, but added that it was also likely to recover about DKK 290m (€38.9) that it says is currently lost to illegal soft drink sales and people crossing the border to buy cheaper soda.
In addition, it claims the measure will increase Danish competitiveness and recoup jobs lost as a result of cross-border trade.
Niels Hald, secretary general of the Danish soft drinks association, Bryggeriforeningen, said: “In taking this step the Danish government acknowledged the regressive nature of the tax, its negative impact on regional jobs close to the borders and the adverse environmental consequences of border trade.”
The Union of European Soft Drink Associations (UNESDA) also welcomed the move.
“Soft drinks taxes are on the wane and being voted down by governments and parliaments across Europe,” commented UNESDA secretary general Alain Beaumont. “They have not proven to achieve any public health objectives and they destroy jobs and economic value.”
The move follows the Danish government’s elimination of a tax on saturated fat in November last year – just a year after it was implemented – when it also announced that it planned to cancel another proposed sugar tax.