Russia considers a tax on palm oil and sugary drinks

By Niamh Michail contact

- Last updated on GMT

Palm oil is the second most consumed vegetable oil in Russia according to figures from the United States Department of Agriculture. © iStock
Palm oil is the second most consumed vegetable oil in Russia according to figures from the United States Department of Agriculture. © iStock

Related tags: Palm oil, Tonne, Kilogram

The Russian government is considering imposing a tax on palm oil and sugary drinks in a bid to fill state coffers and improve public health, according to reports.

The business daily, Vedomosti, reported last Friday that a palm oil tax would be first on the agenda, with a levy of around $200 per tonne that could come into effect as soon as 1 July this year.

The newspaper reported a ministry representative as saying: “From our point of view, taxes on products whose consumption in large quantities is harmful to health, is justified and can be introduced in Russia, especially during the difficult situation with the budget.

“This should be done not only to replenish the treasury, but also to impact on reducing their consumption by economic methods, rather than prohibitions and restrictions especially because often it is not about tobacco and alcohol, and about the products of mass consumption... Palm oil is used to make and not very healthy food products - such as potato and other chips.”

It is understood that Vladimir Putin supports the tax but food manufacturers have been quick to speak out against it saying it will lead to a rise in prices for consumers.

According to a 2014 report by the United States Department of Agriculture​, palm oil is the second most consumed vegetable oil in Russia, widely used in confectionery to replace more expensive ingredients such as cocoa butter and even frequently used in dairy products.

For 2013/2014 Russia’s imports of palm oil are estimated to have been 0.64 million metric tonnes while FAS/Moscow forecast further increases to 0.7 million metric tonnes by 2014/15.

“The import duty on palm oil for use in food processing is 4 percent of customs value, but not less than 0.1 Euro per 1 kg (100 Euro per 1 metric tonne) for packs of not more than 20,000 kg. Imports of palm oil for industrial consumption (not food processing) and for food processing in packs over 20,000 kg is duty-free,” ​says the report.

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