Slovakia’s parliament recently passed new laws aimed at increasing the price of sugary drinks and tobacco products to help reduce the country’s budget deficit. The new tax on sweetened non-alcoholic beverages is expected to generate an extra €85m in revenue by 2025, while the tax on e-cigarettes and other nicotine and tobacco products could bring in €126m by 2026. These measures are part of a broader strategy to reduce the budget deficit, which is one of the highest in the European Union. Fitch predicts that the Slovak deficit will reach 5.7% of GDP this year, but is expected to narrow to 5.2% by 2025.
Slovak Prime Minister Robert Fico and Finance Minister Ladislav Kamencky have ambitious plans to reduce the deficit to less than 3% of GDP by 2025 through a combination of tax increases and spending cuts. Fico emphasizes the importance of higher tax revenues from tobacco products and sugary drinks in achieving this goal. However, the Slovak soft drinks and mineral waters association has criticized the tax increase as discriminatory, arguing that it unfairly targets soft drinks while other high-sugar products like sweets are exempt. Despite this criticism, similar sugar taxes are already in place in countries like France, Belgium, Finland, and the United Kingdom.
In addition to Slovakia, several other European countries have implemented sugar taxes in recent years as part of efforts to combat obesity and raise revenue. Denmark introduced a “fat tax” in 2011 but later abandoned it due to negative outcomes. The United Kingdom’s Soft Drinks Industry Levy, introduced in 2018, has led to successful product reformulation by major beverage producers like Coca-Cola and PepsiCo. Estonia and Portugal have also implemented sugar taxes, with Portugal expanding its tax to cover a wider range of sugary products beyond beverages. However, the impact of these taxes on overall obesity rates has been mixed, highlighting the need for comprehensive public health campaigns.
Beyond Slovakia, other EU countries are also grappling with high budget deficits. Italy has the highest deficit in the EU at 7.4%, followed by Hungary at 6.7% and Romania at 6.6%. France and Germany have deficits of 5.5% and 2.5%, while Cyprus and Denmark boast budget surpluses. The challenges faced by these countries underscore the importance of implementing effective fiscal policies to address deficits and ensure long-term economic stability. By introducing measures like sugar taxes, Slovakia and other EU nations are taking steps to reduce budget shortfalls and promote healthier lifestyles among their populations.
