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The Nutella Tax - a tax on negative externalities

Tuesday, November 13, 2012
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Those of you who felt angry or let down by the recent proposals for a  Pasty Tax, or those that have been imposed on static caravans or toasties (turning the mighty Subway in to a new lobbying organisation) in the UK should spare a thought for the poor French citizens who are potentially about to have a new surcharge placed upon Nutella - that famous hazelnut and chocolate spread.

Unlike the previously mentioned British taxes, which were imposed or proposed to generate revenue or close apparent loopholes, this tax has been put forward for market failure reasons.  The tax, of course, is not directly on the brand but upon one of its main ingredients - palm oil.  The proposed increase by the French government is nearly 300%.  The French are arguing that palm oil is a product with negative externalities - poor for the health of its consumers and a large burden on the health system.  There is also a claim that the high production of palm oil in South East Asia has resulted in large-scale deforestation.

Read a short article on the issue at the Huffington Post.  The cost of your morning crepe in Brittany may be about to increase!



 

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