Sugar tax frozen until 31 December: what changes for consumers

With the 6-month postponement of the entry into force of the SUGAR TAX, scheduled for 20 January by the government, consumers have for the time being averted a price increase of around 25% on sugary drinks. The measure, introduced in the Budget Bill 2020 of Giuseppe Conte's government, was created with the aim of discouraging sugar consumption and promoting healthier eating habits - in line with what has already been done in other European and world countries such as France, Spain, the United Kingdom and Hungary, Mexico, Colombia and some cities in the United States - the SUGAR TAX from 1 July 2025 would have affected producers and importers of sweetened soft drinks, applying a consumption tax of 10 euro per hectolitre on soft drinks finished with sweeteners and 0.25 euro cents per kg in the case of products prepared to be used only after being diluted.

The measure has therefore reached its eighth postponement: so far, it has not been possible to eliminate it completely because it would be necessary to find stable coverages to waive the estimated revenue: postponing the entry into force of the SUGAR TAX by six months already means having to waive about 60 million euro for the whole of 2025, at least according to the latest quantifications of the State General Accounting Office finalised for the conversion into law of the Superbonus decree (Decree-Law 39/2024).

In the majority there is strong criticism against this tax, which has been described as 'unfair, ideological and harmful', with data showing that 'there is no link between the tax and the reduction in the consumption of sugary drinks, while there is certainly a negative impact on companies and jobs'. It is necessary, said majority representatives, "to defend the purchasing power of families from inflation and the productivity of companies in the sector, already struggling with increases in energy costs".

Businesses in the sector are also against a measure that could damage 'Italian agribusiness at a difficult time due to the complex international situation', as Coldiretti points out. Assobibe, the Confindustria association representing companies that produce and sell non-alcoholic beverages in Italy, pointed out that the entry into force of the SUGAR TAX as it is written would put thousands of jobs at risk, especially in small and medium-sized companies in Southern Italy. With the entry into force of the tax, there would be a 28% increase in taxation on a litre of sweetened drink (which would be mostly passed on to consumers, with price increases of 25%) . Moreover, again according to the companies, the receipts for the State would not take into account the EUR 275 million in lost VAT revenue linked to the possible contraction of sales in the two-year period following the entry into force of the rule, estimated by Nomisma at around 16 per cent. In addition, the Sugar tax could result in a brake on investments of more than EUR 46 million, a drop in raw material purchases of more than EUR 400 million, and a 10 per cent cut in turnover, consequently reducing activities and investments in Italy (-12 per cent). All this with almost 5,000 jobs at risk.

Beyond the ex ante estimates, all to be verified, of the impact of the SUGAR TAX on the decline in obesity rates (which, however, if observed, could also have other causes, since obesity depends on several factors and not only on the excessive consumption of sugary drinks), the case of Spain is interesting, where an attempt was made to measure the effects of the tax years after its adoption. In 2021, the Spanish government raised the VAT from 10 to 21 per cent on sugary and sweetened drinks. El Centro de Políticas Económicas EsadeEcPol, a Think Tank that describes itself as independent, noted in late 2022 that more than 90% of the VAT increase was passed on to the final consumer price, with a 9.5% increase in the average price per litre. The research showed a drop in the consumption of these drinks of 13% (an effect that is multiplied by four in the case of children between 5 and 16 years compared to households without children) but only in 33% of the poorest households. In the remainder of the population the effect was insignificant.