Sugar/Fat Taxes May Lead Consumers To Switch To Cheaper Products, Study Finds

A new report by the European Commission has found that taxes on high-sugar, high-salt or fatty produ…

A new report by the European Commission has found that taxes on high-sugar, high-salt or fatty products may lead consumers to switch to cheaper products, and therefore have little effect in curbing the consumption of said products.

The report, Food Taxes and Their Impact on Competitiveness in the Agri-Food Sector, was commissioned by the Directorate-General for Enterprise and Industry of the European Commission to the ECSIP Consortium, led by Ecorys Netherlands.

It found that while such taxes reduce the consumption of high-sugar, high-salt or fatty products 'in general', consumers may 'simply buy cheaper brands of the taxed products, thus potentially not lowering their consumption of the ingredient the tax aims to target'.

It also noted that food taxes lead to an 'increase in administrative burden' on agri-food businesses, and, as such, can be detrimental to sector competitiveness. 'When consumers switch to cheaper brands, it reduces the competitiveness of premium brand producers,' the report found. 'Likewise, substitution from taxed products to non-taxed products reduces the competitiveness of producers of the taxed products compared to producers of the non-taxed products.'

The report did not, however, find that cross-border shopping would increase as a result of one member state introducing food taxes, saying that other factors, such as increased excise duty on particular product categories, has a more pronounced effect.