Senate Approves Increased Taxes on Sugary Drinks and Tobacco
In a decisive move, the French Senate voted on Thursday to implement significant tax increases on sugary drinks, gambling, and tobacco as part of the Social Security financing bill for 2025. This initiative aims to address public health concerns and improve the financial health of the Social Security system. Senator Élisabeth Doineau, the general rapporteur for the Social Security budget, described the tax hikes as a necessary measure to 'kick the food industry.' The new tax structure will impose a charge of 4 cents per liter on the least sugary drinks, escalating to 35 cents per liter for the sweetest varieties. This scale is notably more stringent than the previous proposal from the Assembly, which suggested a range of 3.5 to 28 cents.
The Senate's support for these measures reflects a broad consensus across political lines, with both right and left factions agreeing on the need for increased taxation on sugary beverages. Additionally, the Senate voted to raise the average price of a packet of cigarettes to 12.70 euros, marking a 40-cent increase from earlier plans. This adjustment is projected to generate approximately 200 million euros in revenue, contributing to the overall goal of reducing the Social Security deficit.
Gambling and Tobacco Taxation
The Senate's decision also included provisions for gambling and games of chance. An amendment to increase taxes on lotteries, casinos, and sports betting was successfully reintroduced, although horse racing betting was spared from these hikes. This move comes after a previous rejection in the Assembly, showcasing the Senate's commitment to enhancing revenue from gambling activities.
In contrast, the government faced opposition regarding the taxation of nicotine pouches, which are popular among younger demographics. While Health Minister Geneviève Darrieussecq advocated for a ban on these products, the Senate opted to include a tax that will become void once the pouches are officially prohibited.
Financial Implications for Social Security
These behavioral tax increases are part of a broader strategy to address the Social Security deficit, which has shown signs of improvement. The current balance stands at -15 billion euros, an enhancement from the previously anticipated -16 billion euros. This positive shift is attributed to various factors, including a new 'solidarity contribution' expected to yield 2.5 billion euros and increased taxation on free shares contributing an additional 500 million euros.
Despite these gains, the Senate also approved measures that could negatively impact revenue, including reductions in employer contributions and additional expenditures in health and pensions. A compromise regarding pension adjustments has been proposed, aiming to increase pensions by half of inflation on January 1, with a further increase planned for July. However, this proposal has yet to be voted on in the Senate, as discussions continue on the expenditure aspects of the Social Security budget.
