Exploring the potential for expanding excise taxes to products high in sugar and salt
Overweight and obesity, along with an unbalanced diet and low physical activity, are significant public health issues contributing to various chronic diseases such as cardiovascular disease, type-2 diabetes, hypertension, coronary heart diseases and certain cancers. For specific individuals, being overweight may further be linked to a wide range of psychological problems. Overweight and obesity rates are extremely high in all EU countries. In the EU in 2022 more than half of the adult population aged 18 and over (51.3%) considered overweight (including pre-obese and obese)[1]. Latvia has the 2nd highest proportion of overweight people in the EU (60.4%). In Estonia and Lithuania, the proportions are also relatively high (57.4% and 59.4% respectively and the 5th and 10th positions among the EU-27 member states).
This issue puts a considerable strain on health care and social resources and is a high priority on the policy agenda in Latvia. In early September 2024, the Ministry of Health of the Republic of Latvia drafted “The Action Plan for Reducing the Growth in the Prevalence of Overweight and Obesity for 2025–2029” and opened it for public discussion. Recognizing that the development of overweight and obesity has multifactorial causes, a comprehensive approach is required to effectively tackle this problem, involving experts from various fields and addressing the issue from multiple perspectives. Excise tax could be considered as one of the tools in a complex approach to discourage excessive consumption of foods and beverages high in sugar and salt, encourage a balanced diet and promote positive health outcomes.
This report aims to analyze the use of excise taxes on non-alcoholic beverages in Latvia and other EU member states and explore the potential for expanding these taxes to other sugar and salt-rich products in the Baltic countries. The focus is on evaluating the implications of such taxes from the point of view of state revenues, public health, consumer welfare, and other policy objectives, such as incentivizing product reformulation, and developing recommendations on excise tax policy.
The study was commissioned by VA Government. It was developed independently and reflects only the views of the authors.
[1] Eurostat based on data collected via EU-SILC (Statistics on Income and Living Conditions).
