France's top constitutional body, the Constitutional Council, approved the tariff – which works out at about 1 euro cent per container – in efforts to reduce obesity levels in the country and raise funds. The tax will be effective from the first of January 2012.
The duty, originally proposed last year, will form part of French austerity measures passed to help battle the debt crisis. The tax is expected to generate around €120 million ($156 million) in revenue for the French government.
The legislation is part of a growing trend in Europe to impose so called ‘sin taxes’ on food and drinks associated with poor health and obesity. Last year Hungary introduced a "fat tax" on goods with high fat, sugar and salt content, including soft drinks. Denmark and several other European countries also have soda taxes.
However, in its decision approving the legislation French authorities said that while it didn't believe the government was imposing the tax only to promote health and combat obesity, it also didn't see any unfair disadvantages for a specific product group in the legislation.
Industry opposition
Many beverage firms oppose the tax, arguing that it is unfair. Earlier this year Coca-Cola Enterprises slammed the tax proposal by suspending plans for a 17million euro investment at a plant in the south of France. The company said pulling out of the investment was "a symbolic protest against a tax that punishes our company and stigmatises our products."
"This (investment) has not been cancelled but it must be re-evaluated in the context of uncertainty created by the tax," said Coca-Cola.
It has been suggested that most industry members will raise the tax money by increasing price per drink. Coca-Cola recently warned that that any French soda tax could lead to retail price rises of around 10%.
Coca-Cola Enterprises’ European president Hubert Patricot said the tax would impact over 90% of the firms portfolio in the country, including sparking carbonated soft drinks, both sugar and diet, juice drinks with added sugar.
“We’re not in favour of this kind of discriminatory tax, and we wish they were not there ... As we’ve already said, we expect that volumes in France would be impacted, but…we believe our French business can still grow modestly,” he explained.