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Romania To Introduce Fat Tax On March 1

Monday, February 22, 2010

Romania is to forge ahead with its tax on obesity - to enter into force on March 1, 2010 - despite heated debate over the issue. The tax - still subject to political debate - is expected to be more comprehensive than many other similar taxes proposed in other countries.

The so-called ‘fat tax’ was first proposed by the Health Ministry in response to growing obesity. Obesity rates have doubled in adults in two years, and childhood obesity has increased two-fold in the last decade. 25% of Romanians are clinically obese, and half are considered overweight.

Details have not been firmed up by the government, as they are still subject to debate, but it is understood that the levy, combined with recent increased in food prices, could increase the price paid for unhealthy foods by as much as 30%, generating around EUR1bn in extra revenues annually.

The tax is to be levied on the content of the food, and not on certain food types - as proposed in similar levies elsewhere. Romania’s ‘fat tax’ is to be levied based on the fat, additives and salt content of food on a progressive basis, with tax applied at the point of sale, and remitted to the government by the seller.

Those in opposition to the levy argue that the tax could have an adverse impact. They argue that less affluent Romanians are more likely to purchase fatty foods as they are less expensive than healthy options.

There are also doubts about its efficacy, and its effect on government revenues. As is often the case with hikes in ‘sin taxes’ the authorities run the risk of the emergence of a more prominent grey market, making junk food ‘forbidden fruits,’ and more profitable for those that would illegally trade them free of the tax.

Those opposed to the levy have called on the government to make it less punitive, and instead reeducate Romanians on nutrition.