Text file: 403.txt
author: yamast
downvotes: 7
end consideration date: 2010-02-16
id: '403'
number comments: 7
number views: 4572
proposal type: Competent authority response
response: 'Joint response from the Ministry of Finance and the Ministry of Health

  The proposal foresees the introduction of a new tax rate for unhealthy diets and,
  consequently, the possibility to reduce VAT on healthy diets. The initiative has
  been received and examined by the Ministry of Health. The position presented below
  represents the joint response of the two Ministries.

  Various surveys on the eating habits of Slovenians show that the diet of the Slovenian
  population is unhealthy. The dietary regime (number of daily meals, distribution
  of meals throughout the day) is inadequate and the energy value of meals is too
  high and not in line with the recommendations for healthy eating. People consume
  excessive amounts of meals rich in fat, sugars, salt and energy, leading to overnutrition,
  obesity, high blood pressure and associated chronic non-communicable diseases, which
  are a pressing public health problem and a major cause of mortality. Research also
  shows that people in Slovenia do not consume enough vegetables and fruit.

  The main groups at higher-than-average risk of unhealthy diets in Slovenia are:
  men, active people aged between 25 and 49, workers, people with lower levels of
  education (with at most two or three years of vocational education) and lower socio-economic
  status, people living in rural areas and people living in the eastern part of Slovenia.

  In order to promote and strengthen healthy eating habits of the Slovenian population,
  the National Assembly of the Republic of Slovenia approved the Resolution on the
  National Nutrition Policy Programme 2005-2010 (Official Gazette of the Republic
  of Slovenia, No 39/05) in March 2005 (attached). The Resolution on the National
  Nutrition Policy Programme 2005-2010 (hereinafter referred to as the National Nutrition
  Policy) is comprehensive and includes three fundamental pillars that are important
  for ensuring a healthy diet. Pillar I. The pillar of a balanced and protective diet;
  and Pillar III. The pillar of ensuring a sustainable food supply.

  The key objectives of the National Food Policy are to encourage healthy eating habits,
  ensure food safety and sustainable food supply. At the implementation level, the
  National Nutrition Policy is implemented through action plans prepared and coordinated
  by key line ministries and approved by the Government of the Republic of Slovenia.
  One of the key nutritional problems is the excessive intake of so-called "junk foods",
  which are extremely energy-dense and nutritionally very empty. These foods include
  mainly bakery and confectionery products and industrial desserts; carbonated and
  non-carbonated sugary drinks; meat, mayonnaise, chocolate spreads and hard margarines;
  high-fat foods; meat products (salami, sausages, etc.) and other products with a
  high fat content.The foods advised against in a healthy diet are not completely
  prohibited if they are included in daily meals in smaller quantities and at longer
  intervals.

  At the same time, intensive and aggressive advertising of unhealthy products, which
  stimulates demand for so-called ''junk foods'', and the introduction of vending
  machines with unhealthy products are also a major problem. The problem is particularly
  acute in the population of children and adolescents who are still developing their
  eating habits. It is well known that eating habits acquired early in childhood,
  whether healthy or unhealthy, are often maintained for the rest of an individual''s
  life.

  In order to promote healthy and balanced diets among different population groups,
  the Ministry of Health has in recent years adopted healthy eating guidelines for
  different population groups (children and adolescents, students, working population,
  patients and the elderly). These guidelines stress, among other nutritional recommendations,
  the importance of including non-advised foods as little as possible in daily menus.
  Most of the guidelines have already been put into practice in settings (educational
  establishments, workers'' organisations, hospitals, homes for the elderly, etc.)
  where organised food planning and preparation are carried out.

  After reviewing the situation in other European countries, we find that most European
  countries do not introduce new tax rates on unhealthy diets as part of their national
  nutrition policies (e.g. Belgium, Hungary, Germany, Cyprus, the Netherlands and
  the Czech Republic). An exception is Ireland, which has basic food products (bread,
  butter, milk, vegetables, fruit, etc.) that are not taxed as part of their national
  nutrition policies.) are tax-free, while products that are considered less beneficial
  when consumed more frequently (e.g. confectionery, chocolate, sweet snacks, ice
  cream, frozen desserts, sweet fizzy drinks and alcohol) are taxed at 13.5% and 21.5%
  respectively. A similar situation exists in Denmark, where foodstuffs are taxed
  at 25%, with an additional tax on sweet fizzy drinks and confectionery (sweet snacks,
  chocolate, etc.).

  A recent example of this type of measure was Romania, which introduced a tax on
  fast food on 1 March this year, with the aim of raising additional money for the
  implementation of the health system. According to an announcement by the Romanian
  Minister of Health, Attila Csek, all fast food manufacturers and importers would
  have to pay the tax, and the list of those liable for the tax includes not only
  traditional fast food providers, but also foods containing high levels of salt,
  fat, sugar and other additives. Romania decided to take this measure mainly to cover
  its budget deficit and to alleviate its financial difficulties. The results of the
  implementation and the success of the measure are not yet available. In Slovenia,
  food is taxed at a lower VAT rate of 8.5%. According to ZDDV-1-UPB2, the lower VAT
  rate applies to:

  food (including beverages, except alcoholic beverages) for human and animal consumption;
  live animals, seeds, plants and adulterants (normally) intended for the preparation
  of food; articles (normally) used as an additive to or as a substitute for food;
  the preparation of dishes; and for

  water supply.

  The lower VAT rate applies regardless of whether the type of food is colloquially
  classified as healthy or unhealthy, as such a distinction would require a very clear
  legal definition of healthy or unhealthy food, or would require a law to specify
  the products to which the lower rate applies. An additional problem is the need
  to ensure non-discriminatory treatment of equivalent products and services in the
  tax system. Separating healthy and unhealthy food in the application of the reduced
  VAT rate would also be inappropriate from the point of view of administrative complexity,
  especially for taxable persons with a smaller turnover, since in practice there
  are difficulties in defining which products qualify for the reduced rate and, in
  connection with this, the possibility of different interpretations in borderline
  cases and a greater potential for tax abuse. All these arguments led, when VAT was
  introduced, to the orientation that the reduced rate should apply to all food and
  not only to specific products used for human consumption.

  The VAT system must be in line with the European directives in this area, which
  means that a country may only introduce one standard rate and a maximum of two reduced
  rates, with the standard rate not being lower than 15% and the reduced rates not
  being lower than 5%. Slovenia has decided to design its VAT system using only one
  reduced rate.

  The proposal to introduce a new VAT rate on unhealthy food can therefore only be
  understood as proposing to apply a standard VAT rate to certain food products. This
  would increase the cost of implementing the VAT Act for both the tax authorities
  and taxable persons. Moreover, in times of economic and financial crisis, the economic
  and social situation of the weaker sections of the population would be further jeopardised,
  since the application of a lower VAT rate to food is justified primarily on the
  grounds that it reduces the burden on the population in the lower income brackets
  and reduces the regressivity of VAT.

  On the other hand, the proposal could also be understood as imposing a special tax
  (excise duty) on certain (harmful) food products in addition to VAT, which would
  need to be defined very precisely. This is also the route taken by some other European
  countries (e.g. Denmark). Any new taxation should be properly integrated into the
  overall Slovenian tax system and the comparability of the level of taxation with
  that of similar products in neighbouring countries should be checked, as over-taxation
  of certain food products in Slovenia may lead to a drain of purchasing power to
  neighbouring countries, without contributing to greater health awareness among consumers.
  In view of the current social, economic and public financial situation in Slovenia,
  we consider it necessary to reflect on the appropriateness of introducing such a
  measure.

  The current national nutrition policy, formulated by the Ministry of Health, does
  not foresee a measure to tax unhealthy diets as such in its text, as its objectives
  are mainly focused on activities to raise awareness among the population about the
  importance of unhealthy eating habits and on concrete systemic measures where it
  is possible to influence the supply of healthy meals in order to achieve the objectives
  of better nutrition (e.g. the provision of healthy meals in the food supply). organised
  meals in educational establishments, subsidised student meals, organised meals in
  work organisations, catering, etc.).

  The current Food Policy expires in 2010 and the Ministry of Health will prepare
  a proposal for a new one, which, with the participation of the Ministry of Finance,
  will also examine in more detail the possibility of taking action on the introduction
  of taxes on foods that are less beneficial to health.  '
response date: 2010-03-04
response due date: null
sent date: 2010-01-16
title: I propose a new tax rate on unhealthy food
upvotes: 9
url: https://predlagam.vladi.si/predlog/403
