Economist urges vigilance
September, 2016 in Issue 3 - 2016, Comment
On June 23, 2016, during the National Assembly plenary debate on the Biodiversity Bill and while discussing the palm oil tax, MPs Hammadi and Louwagie informed the audience that they had finalised a report on the taxation of food products. Moreover, the French government has decided to review taxation on all vegetable oils in the next six months. How do you see this going forward?
This is what I referred to about the tax coming back in a different form. Revising vegetable oil taxation is a good idea, as long as it is fair and just. However it seems the new proposal will be discriminatory to palm oil from an economic perspective. It is very likely that the revision will have a chapter on oils that don’t respond to certain sustainability criteria and which will then be subject to a tax.
But, as I have said, the question of sustainability is a complex one and it is to be feared that the outcome will be justified with weak scientific evidence that is disproportionate and discriminatory, and therefore unfair. This will lead to horrible consequences.
First, it will potentially lead to price rises of food products for human consumption. These price rises are regressive and will hurt consumers all over France. Second, such a proposal will widen the gap with domestic oils that will be favoured even more by the tax system. This is a violation of both WTO and EU rules.
Moreover, the suggested approach of the report by MPs Louwagie and Hammadi claims to be ‘simplifying the system’ by suppressing all taxation on vegetable oils. This will be compensated financially by raising the tax on sugary drinks and products. Vegetable oil taxation is complex and outdated; however, suppressing all vegetable oils will favour products such as olive and rapeseed oils that are currently the lower-taxed oils on the market and are not used in the production of sugary drinks.
The French government has indicated that it will set up international sustainability standards for vegetable oils and will very likely tax those that don’t fit the criteria, which have yet to be defined. This will mark further regulation and protectionism of imported vegetable oils.
The industry and civil society should remain vigilant for this stubborn attempt to discriminate against palm oil. This approach could hurt everyone, from industry to consumers, and it will not necessarily be good news for the environment. This new report and the proposed revision of the vegetable oils taxation will need to be watched very closely.
MPOC
