Crackling echo of the chips tax

Banking

French news agency AFP called the new law coming into force in Hungary by the beginning of September "rather questionable". According to its correspondent, there is no evidence that the "chips tax" would have any impact on  eating habits by slapping a levy on  excessively salty or sweet food products.

AFP quotes Viktor Orbán himself on the purpose of the tax. According to the Prime Minister the government targeted pre-packaged savoury products, biscuits, fizzy and energy drinks in order to combat obesity.

The cash-strapped government, which has slashed spending in an attempt to cut its debt amid a stagnating economy, also hopes the levy will bring €74 million ($106 million) into state coffers each year.

"We give the message to consumers not to eat such unhealthy and expensive products," Sándor Font, the parliamentary deputy behind the tax, told AFP.

"But we also want to push producers to decrease the salt and sugar levels," Font added.

The law however shied away from slapping a tax on traditional Hungarian food such as sausages, salami and a wide variety of lard which the original legislation had targeted.

"This is a rushed step taken without consultation which will primarily hurt small local producers," said Réka Szőlősi of the Hungarian Food Producers' Association.

"It will chase away big foreign firms while the black market will flourish," she added.

According to economic daily Világgazdasag, the German owner of Chio Chips had already decided against building its new popcorn factory in Hungary in the wake of the chips tax decision.

As for local producers, the Hungarian maker of Hell energy drink will follow suit, according to the paper.

The special tax is to be paid by the Hungarian maker or the main importer of the product.

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