Iceland review - 2019, Page 20

16
Iceland Review
Mixed (sugar) bag
Iceland implemented a short-lived sugar
tax of 5% from March 2013 to January
2015. It was eventually repealed due to
heavy criticism. That time around, the cost
of sweetened soft drinks rose by only ISK
5 ($0.04/€0.04) per litre, far from enough
to repel consumers. The implementation
was a failure when it came to chocolate,
which actually lowered in cost, as the
sugar tax replaced pre-existing taxes
which had been higher. Unsurprisingly,
consumption of sugar-rich products did
not decrease, and as a consequence the
government filled its coffers with ISK 200
million ($1.58m/€1.4m) more than they
had expected from the initiative.
This time around, a 20% sugar tax has
been suggested, in order to achieve a pro-
found change in price which consumers of
soft drinks and sweets can feel in their wal-
lets. As of now, soft drinks are categorised
in a lower tax bracket, at 11% VAT. The pro-
posal suggests moving them to the higher
24% VAT category, and implementing an
additional tax which would result in a 20%
price hike for consumers overall.

Critics galore
The government’s proposal has not been
taken to kindly by the public. Detractors
of the tax have suggested that the move
is not an incentive, rather a fine. Ólafur
Stephensen, Director of the Icelandic
Federation of Trade, has his doubts about
the idea. Ólafur says the sugar tax is a
step backward from recent efforts which
have streamlined food taxation in the
country, to the benefit of both consumers
and businesses. Ólafur, along with many
others, also criticises the tax’s prescrip-
tive nature. “It’s so incredibly difficult
when governments are starting to decide
what is healthy and what is unhealthy for
us, changing the price of things in order
to control consumption. If taxes are to be
applied to this end, then there should be
high taxes on TVs and low taxes on run-
ning shoes.”
The Icelandic Association for Body
Respect has criticised Health Minister
Svandís Svavarsdóttir for encourag-
ing prejudice against fat people in her
discussion of the proposed sugar tax.
“Icelanders of all ages and of all genders,
sizes, and shapes consume sugar. An
excessive consumption of sugar is not just
unhealthy for fat people,” part of their
statement read. Svandís responded to
the criticism by saying “It has consistently
been pointed out that Iceland has a high
proportion of fat people and that the con-
sumption of sugary products increases
the likeliness of obesity and tooth decay
and high consumption of sugary sodas
and beverages can additionally increase
the likelihood of type 2 diabetes.”
Does taxation work?
It remains to be seen whether the taxa-
tion of sugar will be implemented, and
whether it will be a success this time
around in Iceland. According to a 2016
World Health Organisation report, taxa-
tion of sugar is one of the most effective