Hungary Levies 'Chips Tax' on Salty, Sweet Food Products

Hungary's controversial law slapping a levy on excessively salty or sweet food products, dubbed the "chips tax", entered into force on Thursday.

The centre-right government of Prime Minister Viktor Orban says the goal of the tax, which targets primarily pre-packaged savoury products, biscuits, fizzy and energy drinks, is to change Hungarian eating habits and combat obesity.

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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 euros ($106 million) into state coffers each year.

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

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

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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 Reka Szolosi of the Hungarian Food Producers' Association.

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

According to economic daily Vilaggazdasag, 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.

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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.

Source-AFP