Armenian businesses protest tax hike on soda beverages

Carbonated drinks in Armenia will soon be subject to a ‘sugar tax’.

Manufacturing companies are protesting the move, saying it will hurt their businesses.

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What is the issue?

The protest was sparked by a Ministry of Finance proposal to increase taxes on carbonated beverages by five per cent per litre.

Not only do small and medium-sized businesses oppose the idea, but also large companies such as Coca-Cola Hellenic Armenia, the manufacturer of Coca-Cola in Armenia, have come out against it.

Demonstrators came to the government building with posters “I will become unemployed”, “The government is killing medium-sized business” and “No to a rise in the price of carbonated drinks”.

The general director of the company producing Coca-Cola, Gurgen Narimanyan, said earlier that the tax increase will lead to a rise in the price of carbonated drinks by 30-40 drams (approximately 8 cents), and presented the expected consequences:

“After that, sales, revenues and, eventually, jobs will be reduced. This is only the initial consequences, and the matter won’t end there. We are talking about a long chain [of events], and only part of it can now be predicted.”

Hay Cola employee Tigran Hovsepyan says the company employs 100 people, and as a result of tax changes, the company may face the threat of closure:

“We are accused of the fact that the drinks we produce are harmful to our health. It turns out we’ve been poisoning the population for years? Let them justify their accusations. What we have here is an attempt to monopolize the market.”

Employees from the company Mari were also present. The company only employs 40 people, but the tax hike might lead to its closure.

“We have been in operation for 20 years, but now, overnight, our products became harmful? We also have loans that need to be paid,” the company’s employees said, outraged.

What do the ministries of health and finance say?

The Ministry of Health of Armenia made a proposal at the end of last year to reduce the consumption of carbonated beverages, arguing that the consumption of soft drinks can have negative effects on health.

The Ministry of Finance took note of the statement made by the Ministry of Health and announced its intention to make changes to the Tax Code.

At first it was supposed to introduce an excise tax of 5% on soft drinks of which the sugar content exceeds 5% per 1 litre. But it was later decided to tax not only those drinks that have sugar, but also mineral water and all carbonated drinks with flavours.

International experience 

The so-called “sugar tax” has been in operation in the UK for almost a year. It was introduced for non-alcoholic beverages in which the sugar content exceeds certain limits.

In this way, the UK authorities want to fight obesity and other related illnesses.

In the UK, drinks high in dairy content will be exempt from this tax, as they are necessary for a healthy diet.

Taxpayers’ money collected from the tax is planned to be allocated to programmes to promote physical activity and a balanced diet among schoolchildren.