No more taxes on food!

Austria is a high-tax country. Nevertheless, new or higher taxes on food and beverages are being discussed to consolidate the budget. “Taxes on sugar, alcohol or tobacco would make food and beverages more expensive again. People continue to be particularly concerned about inflation. It was the strongest voting motif in this year’s elections. We ask ourselves who would want to be responsible for further increases in food prices. Nobody can seriously want that now – at least not the industry!” appeals Mag. Katharina KoßdorffManaging Director of the Food Industry Association, to the negotiators for a new federal government.

New taxes are causing prices for food and beverages to rise again – this hits lower-income people and families particularly hard

New consumption taxes are fueling inflation again and making food and beverages more expensive again. High prices for these products hit lower-income people and families particularly hard. “In the last two years we have had rising food inflation due, among other things, to high energy prices. In 2022 and 2023, this was +10.7% and +11.0% for food and non-alcoholic soft drinks, respectively. If, for example, there is a sugar tax on non-alcoholic soft drinks like in Great Britain, we expect these drinks to increase in price by a double-digit percentage range (example: increase in the price of 1 liter of cola drink with a sales price in grocery stores of 1.89 Ꞓ or 1.49 Ꞓ – promotional price, November 2024 – depending on the sugar content between +14.0% and +23.4%). In addition: From January 1st, 2025, the new one-way deposit on plastic bottles and cans of 25 cents will also apply when shopping.

What many people don’t know: luxury foods such as alcohol or tobacco are already burdened with high taxes. For example, the total tax share of the sales price of cigarettes (including VAT) is a whopping 76 percent! An increase in these tax rates is already priced into the current tobacco tax plan until 2026 with additional annual revenue of 25 – 40 million Ꞓ. “We therefore reject a further increase in cigarettes,” said Koßdorff.

The industry is struggling with economic stagnation and weakened competitiveness

New and higher taxes are not only fueling inflation again, but are also hitting food businesses. The domestic food and beverage industry is currently experiencing economic stagnation due to inflation and persistently high cost pressure. “We are losing price competitiveness – domestically and in exports. New taxes would further weaken the competitive situation of our operations and production in Austria. There are a lot of jobs tied to it.”warns Koßdorff. A number of companies are already investing abroad because work and energy cost much more here. Added to this are the increasing costs for the many new regulations – from sustainability reporting to the supply chain law and the deforestation regulation to the one-way deposit system from 2025.

Revenue for the tax authorities is low and unsustainable

Experience with similar tax models in other countries shows that changes in the nature of products and consumers making alternative purchases, for example over the border or on products that are lower or not taxed, mean that the tax authorities lose out on considerable tax revenue. In Great Britain, for example, they were with the Soft drinks tax Revenues in the first three years were 29% lower than planned (GBP 355m vs. expected average revenues of GBP 492m). In Denmark A fat tax led to a significant increase in purchases by Danes in Germany and damaged the economy to such an extent that it was quickly abolished. In Belgium, according to the Austrian Foreign Trade Center in Brussels, one in eight Belgians travels across the border once a month to buy drinks because of the Belgian sugar tax on soft drinks. As a result, the Belgian retail sector is losing around 370 million Ꞓ. Shopping tourism from Austria to neighboring countries with lower tax rates is also a well-known phenomenon for tobacco products and alcoholic beverages. New or higher taxes in Austria would fuel this further and significantly reduce domestic tax revenue. Conclusion: It can be observed everywhere that the expected income from taxes remained below expectations. At the same time, however, these taxes harmed the entire agricultural and food chain – from farmers to processors to retailers.

In Austria, for example, the domestic sugar and alcohol industry ensures that local farmers can buy their harvest and creates jobs in the affected regions. In addition, the sugar industry ensures that Austria can still supply itself 100% with sugar. This is not a given, because Austria’s level of self-sufficiency in agricultural raw materials is low – apart from sugar, milk and beef, Austria cannot supply itself with any other agricultural raw materials and is constantly dependent on imports from abroad (Agricultural raw materials: A lot of things have to be imported).

Health control goals are not being met – example: sugar tax on soft drinks

There is no reliable evidence that a sugar tax on soft drinks has a health-inducing effect (3 x 3 arguments against a sugar tax on soft drinks). On the contrary: in all countries with sugar taxes (including Mexico, Chile, France and Great Britain) overweight and obesity rates have continued to rise. Common studies rely on marginally calculated calorie reductions: the soft drinks tax in Mexico only saves 6 calories a day – that’s equivalent to a small bite of apple; in the UK it is 12 calories for children and 20.8 calories for adults per day, which is 1% of the recommended total daily energy intake (SIPCAN-In focus: The British sugar taxp. 11; nutrition today 4_2024 _NUTRITION POLICY).

Koßdorff gets to the point: “These taxes bring no benefits in any way. They neither rehabilitate the budget nor make people slimmer and healthier. Sustainable control effects in terms of health can only be achieved through consistent nutritional education towards a healthy lifestyle with a balanced diet and sufficient exercise – and this is long overdue for us.”said Koßdorff. And further: “Instead of new taxes, our food manufacturers need growth-promoting initiatives and more competitiveness, for example through less bureaucracy.”

Further details can be found at:

Importance of the food industry in Austria

The food industry is one of the largest sectors in Austria. In the interests of consumers, it ensures the supply of safe, high-quality and affordable food every day. The approximately 200 companies with their 27,000 direct employees will generate a production volume of 12 billion euros in 2023. Around 10 billion euros of this are exported to over 180 countries. The trade association supports its members through information, advice and international networking.

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