Romania’s Proposed Tax On Fast-Food To Raise Food Prices 20%, Leave 36,000 People Jobless

Sorin Minea, head of food industry employers' federation Romalimenta, said during a public debate Monday on the introduction of a tax on fast food that such a tax would raise food prices by an average 20% and the increase could even top 30% on certain products.

"The Health Ministry expects to collect about EUR1 billion from this tax. In 2008, Romania's entire food industry turned EUR11.3 billion, and this turnover decreased to EUR10 billion in 2009, including wine, beer, mineral water and imports. If we take these out, the taxable figure stands at around EUR8 billion," said Minea.

He added the term "fast-food" doesn't bear an exact definition and the proposed tax would affect the entire food industry. Minea said all cheeses, cream, milk and butter contain high amounts of salt, as does meat, while high sugar levels are to be found in jams, honey and a wide variety of fruit.

"Romania might artificially raise prices because of an idea the Health Ministry finds innovative. All taxes translate into price increases to be paid by consumers," Minea also said.

In turn, the head of the Food Industry Federation, Dragos Frumosu, said the tax could prompt the industry to shed 20% of employees, leaving 36,000 people jobless.

Frumosu warned higher prices would prompt lower consumption which would ultimately lead to layoffs in the industry.

Agriculture Ministry deputy secretary general Sorin Chelmu said during Monday's debate that he too believes levying a tax on fast food could trigger higher prices.

The tax on fast food proposed by the Health Ministry will be levied starting March 2010 on economic operators that produce or import fast food, pastry, cakes, snacks, chips and fizzy drinks, and the quantum of the tax will be established after negotiations with the respective operators.

The tax will be paid by all legal entities that produce or import food with a high level of salt, fats, sugar and additives, and fast food, pastry, cakes, snacks, chips and fizzy drinks are included in this category of unhealthy food. Mineral water and natural juice obtained from fruit or vegetables will be exempt from this tax.

The list of unhealthy foods will be approved by a Government decision according to the draft law introducing the tax on fast food. The level of the tax will be established after talks between the Health Ministry and companies producing or importing unhealthy food. The money collected will be used to finance health expenses and will go to the Health Ministry's budget starting March 1, 2010.

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