France Fights Obesity and Debt Crisis with Soda Tax

French soda-lovers: beware.

Hoping to kill two birds with one piece of legislation, France has announced that as part of its austerity measures, the nation will implement a new “cola tax” beginning January 1, 2012. The latest in a wave of “sin taxes”—taxes on food and beverages deemed unhealthy—in Europe, the move is meant to rein in obesity and take a bite out of the nation’s multi-billion dollar debt.

According to French officials, the tax is fairly benign: one Eurocent (a smidge over a USD cent) per can of soda, regular or diet. All told, however, it is expected to generate €120 million ($156 million) in government revenue annually. And while one cent may not be enough to curb soda consumption, corresponding increases of prices could give soda-drinkers incentive to quit; soft drink companies in France indicate that they might hike prices by as much as thirty-five percent to combat profit losses.

In addition to the soda tax, France will also raise taxes on spirits and cigarettes.

Yet while government officials have widely supported the move, claiming no “unfair disadvantages” for specific producers, and there has been no outcry from the French public, not everyone is happy about the tax. Soft drink firms in France, including worldwide corporation Coca-Cola, have been protesting the tax’s impartiality and its profit-reducing results.

In September, Coca-Cola announced that it would pull a €17 million investment in a new soda plant in France as a “symbolic protest against a tax that punishes our company and stigmatizes our products.”

Some legislators are backing the soda companies, having gathered a petition with sixty signatures to fight the new move. The Constitutional Council, however, rejected the complaint, and plans to push forward in implementing the tax.

Officials cite success for similar taxes in other European nations as evidence that the “cola tax” will be effective. Recently, fellow European Union member states Hungary and Denmark introduced a “fat tax” on foods and beverages with high fat, sugar, and sodium, including soft drinks.

Historically, “fat” and “cola” taxes have been contemplated since World War II, gaining steam in the early 1980s with fervent advocacy from Kelly D. Brownell, director of the Rudd Center for Food Policy and Obesity at Yale. In 1994, Brownell wrote a New York Times opinion piece on the matter, claiming that unhealthy food’s lower cost serves as an incentive to consume it.

Shortly after, Rush Limbaugh shot back, arguing against government interference in food choices and personal decisions as a whole. Proponents of the tax, in turn, have maintained that the same holds true for taxes on other goods, including alcohol and tobacco.

With the tax about to go into action, its effects on health, both personal and economic, remain to be seen. Officials, however, have high hopes that this new piece of legislation can trim down the nation’s deficit—and its waistlines.

Photo Credit: wikimediafoundation.org/wiki/File:Coca-Cola_bottles.jpg

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