„Chips tax” to improve the state's short-term finances

On September 1. Hungary introduced something that is officially called the "public health product tax," but which everyone is now calling the "chips tax" (chipsadó). Under the law, manufacturers of soft drinks, energy drinks, pre-packaged sweet cookies, salty snacks and seasonings will have to pay various levies depending on the sugar and salt content of foods and drinks. For soft drinks, the tax will be payable if the fruit content is below 25% and the sugar content is above eight grams per 100 milliliters. Energy drinks will be taxed if they contain more than 10 milligrams of caffeine per 100 milliliters. Manufacturers of pre-packaged cookies will have to pay the tax if their product contains more than 40 grams of sugar per 100 grams, and salty snacks will be taxed if their salt content is over 1% of the total weight. For seasonings, the limit is five grams of salt per 100 grams. The amount of the tax is HUF 5 per liter for soft drinks, HUF 25 per liter for energy drinks, HUF 100 per kilogram for cookies and HUF 200 per kilogram for salty snacks and seasonings.
Hungarian news portal, Figyelo.hu reported, that food manufacturers subject to the tax may react by developing new recipes. In the case of salty snacks, companies are expected to reduce salt content slightly, which will not noticeably affect the taste (but could bring them down below the mandated level) while other manufacturers are expected to create a product portfolio which includes food with reduced caffeine, sugar and salt content.
Krisztina Bélai, head secretary of the Federation of Hungarian Confectionery Industries, pointed out that the tax being applied only to pre-packaged sweets means that some price-sensitive consumers will opt for lower quality bulk candy. Some manufactures subject to the tax instead of makeing their offerings less salty and sugary, are deciding to lay off employees and delay already-planned expansions. One of the first was the German owner of Chio Magyarország Kft. - makers of the delicious salty crisps - which announced that because of the tax it would not build a HUF 1 billion (€3.66 million) factory to make peanut-flavored products and popcorn in Hungary.

Last Updated on Friday, 30 August 2013 09:11